116 3rd St SE
Cedar Rapids, Iowa 52401
CEDAR RAPIDS - Two Corridor municipalities learned their bond rating scores in the past week.
Cedar Rapids held steady at an Aa1 bond rating, indicating a stable financial outlook, while Iowa City received an Aaa rating, which is the highest possible, according to annual credit opinions released by Moody's Investor Service.
'The stable outlook reflects our expectation that the city's healthy financial profile will be maintained and its long-term leverage, while elevated, will remain manageable,” according to the Moody's opinion about Cedar Rapids released Tuesday.
Bond ratings impact the interest rate on future bond sales, such that a better rating leads to lower interest.
Cedar Rapids has a bond sale next Tuesday for $36 million in general obligation bonds, series 2017A, and $1.1 million in taxable general obligation bonds, series 2017B. After the sale, Cedar Rapids would have $280 million in general obligation unlimited tax debt.
The proceeds of the first bond sale will be used to refund previous bonds as a savings measure, while remaining proceeds will be used to pay for maintenance and improvement projects within the city. Proceeds from the latter bond will pay for improvements to the Cedar Rapids Ice Arena and parking facilities.
'This rating reflects the financial policies and operational efficiencies we have put in place to carefully manage city resources,” Casey Drew, Cedar Rapids finance director, said in a statement.
Cedar Rapids has the second highest rating possible.
Improved resident incomes, moderating long-term leverage and fixed costs could lead to an upgrade in bond rating, while a downgrade is possible with deterioration of operating reserves, growth in city debt or pension burden, and weakened performance of the city owned DoubleTree Hotel or Cedar Rapids Convention Center.
The hotel has been a black mark for Cedar Rapids in the Moody's report for several years.
In a separate credit opinion, Moody's assigned Aa2 ratings for Cedar Rapids utility bonds, which remains on par with last year.
The Iowa City bond rating is based heavily on the institutional stability of University of Iowa.
'The stable outlook reflects our expectation that the city's tax base will remain sound given ongoing economic development and the institutional stability provided by the University of Iowa,” the opinion released on April 26 states. 'The outlook also reflects our expectation that the city's financial profile will remain healthy given prudent financial management.”
Iowa City had a bond sale on Tuesday for $9.8 million in general obligation bonds, series 2017A. Iowa City now has $51.6 million in general obligation unlimited tax debt. Proceeds are to be used for construction and reconstruction projects, including street and park improvements, according to Moody's.
Iowa City also received Aa2 ratings for utility bonds.
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