I expect this to be discussed at this evening's council meeting. While the rating agencies are indeed imperfect, it is good to see Ramsey's debt service rates likely to track AA+ and not a lower bond rating, where a risk premium would be added atop normal low risk cost-of-borrowing rates for higher rated bonds.
I asked city staff about current rating status, cc'd to the mayor; and Ramsey's CFO, Diana Lund provided a spreadsheet, per the above screenshot (presented for illustrative purposes). Perhaps the city website on its finance dept. page could post a link to the item to make it available online, even though it has limited timliness.
I also say it is "illustrative" because I am unsure how to read it; e.g., for what length of calendar period the tabled numbers apply; where an 0.3% per annum lead top left entry seems low. Without detail of what's represented I prefer not guessing, but giving notice the chart exists and copies can be gotten by Crabgrass readers via a request to CFO Lund.
She noted, "A breakdown of the interest rates for A & higher rated bonds. The City is an AA+ ---- The first tab details the difference in rates. The second tab titled BQ Graph illustrates the difference in rates with a graphic. To load the MS .xls item for a screenshot, I cut it into Google Spreadsheets, and something may have been lost in that cut-over. This, Q and A, from an earlier email exchange:
Diana-
1- Is the City's bond rating under a pending ongoing review? If so by which rating agency or agencies? Yes. We had a rating call last Monday, August 1. Should get rating this week. Ratings firm is S&P (Standards & Poor). The bonds will be sold at the August 23 meeting for the Bunker Lake Bldv/Armstrong Improvements-Backed by Special Assessments and the City's MSA account
2- If there is an ongoing pending review, have you any good guess when a rating decision will be reached? This Week
3- The most recent Finance page on the City website mentions a 2009 review/rating]upgrade, this link:
http://www.ci.ramsey.mn.us/departments/finance.aspx
Is this 2009 info the latest and best, at this point in time, or has there been a subsequent history? This was our last rating as it was our last bond issue.
I ask about this since some bonding is anticipated over the next year or so, and I wondered if there was fresh rating data/info.
Any info you can give would be appreciated. That would include knowledge, even if rough and possibly inexact, about how municipal debt interest rates presently would vary, for each of the different likely bond ratings Ramsey has, and might have. If you'd rather not guess, and bond council has a chart or something, any info would be helpful info. I will send you something from our financial consultant regarding the difference in interest rates for each bond grade.
Eric
Promptness in replying is noted and deserves mention and gratitude. The expectation of keeping the bond rating previously attained was confirmed quickly, once Lund, herself, was informed. The mayor was gracious enough to forward the following:
FYI
From: Paul Donna [mailto:pdonna@northlandsecurities.com]
Sent: Monday, August 08, 2011 10:54 AM
To: Diana Lund
Cc: Laurie Ukofia; Cyndy Litke; Catherine Winkelhake; David Wheeler
Subject: Ramsey Rating
S&P affirmed the AA+ credit rating. Report to follow.
Feedback from committee:
* Very strong AA+ credit
* Very impressed with finances and management
* AAA is a potential long term. Will first need to see impact of the development / tax increment that is anticipated.
PRD
Paul Donna
Senior Vice President - Public Finance
Northland Securities, Inc
45 South 7th Street
Minneapolis, MN 55402
Direct Dial - 612-851-5905
[contact and disclaimer language omitted]
In relevant part, my reply to Bob:
I will post it and credit the council and staff for maintaining it at the level granted via the 2009 online notice. You should be accorded recognition for that. If you get deep into Flaherty-&-Collins it could change, but we agree, it has not changed and we agree that is a good thing. I expect for Ramsey's part of the Northstar stop, with Flaherty and Collins postponed and not a co-pending bond situation, that the AA+ will still hold on that borrow-and-spend thing.
Thanks for the email.[...]
BOTTOM LINE: It is indeed praiseworthy to see the quality bond rating from 2009 being maintained. It would be costly if the rating were dropped, because the market does take ratings seriously for local municipal bonds where independent investor diligence is not easy. I think the mayor, others on council, staff, and Crabgrass readers would join in wanting to see nothing that would "poison the well" of having a substantial quality bond rating on an ongoing basis as Ramsey funds a share of the rail stop, and weighs the wisdom of other bond-and-spend possibilities.