October 20, 2009

CITY RECEIVES AA- BOND RATING FROM STANDARD & POOR’S

RAHWAY – following the issuance of $7.5 million in bond anticipation notes (BANs) and $5 million in General Obligation Refunding Bonds, the City has been assigned its “AA-” long-term rating to refunding bonds from Standard & Poor’s.  This outstanding rating will result in lower interest costs, saving the City thousands of dollars in future borrowing for items like road and sewer improvements and public safety equipment.

“This process is similar to a homeowner refinancing his or her mortgage,” said Mayor James J. Kennedy.  “Our excellent bond rating lets us shop around for the lowest interest rate and save tax dollars over the long run.”

The City was paying interest rates in a range between 2 percent and 3.5 percent for its bonds.  Following this month’s refinancing, those rates dropped to between 1.3 percent and just more than 3 percent.  That means savings in Rahway over the next nine years will amount to more than $420,000.

The Standard & Poor’s report cited the following when determining the City’s bond rating:

• “Mature and stable local economy, with access to and participation in the greater New York metropolitan statistical area, providing residents ample employment and economic opportunities;

• Good income indicators, coupled with extremely strong property wealth levels on a per capita basis;

• Modest but stable tax base growth;

• Low net debt levels, coupled with limited future capital needs.”

Standard & Poor’s has been engaged in issuing credit ratings since 1916.  Today, Standard & Poor’s has credit ratings outstanding on approximately 150,000 securities in over 100 countries.  Standard & Poor's rates and monitors developments pertaining to these securities and obligors from operations in more than 21 cities in 16 countries around the world.  Standard & Poor's rates more than 99.2% of publicly traded U.S. debt obligations and preferred stock issues.