MAYOR DANIEL M. KNAPIK
WESTFIELD – The city has received a bond rating upgrade from Standard & Poor’s Ratings Service, the second time within the past year that a bond rating service has increased the city’s status following a similar increase by Moody’s.
Standard & Poor’s Ratings Service recently raised the city’s rating two notches from ‘A+’ to ‘AA’ which will lower the cost of interest and reduce financing bonds. The agency cited the city’s financial liquidity, strong financial management practices, and rapidly amortizing debt as underlying factors for the upgrade.
Additionally, the city was recently approved by the Municipal Finance Oversight Board to sell its bonds through the Commonwealth’s Aa1 rating from Moody’s, thus allowing for interest savings on an upcoming issue.
Ward 1 Councilor Christopher Keefe, chairman of the Finance Committee, said yesterday that he has not yet seen a bond proposal from Mayor Daniel M. Knapik, but anticipates a “bundled bond” to finance a number of projects in the near future which may include converting short-term borrowing to a bond.
CHRISTOPHER KEEFE
“After a bond is authorized by the City Council, the city often used bond anticipation notes, short term borrowing,” Keefe said, adding that often the bond to finance a project is not sold until completion of the project when the true cost is known.
“Often smaller projects are bundles to attract more bidders,” Keefe said. “If you released just a $300,000 there would be little competition, resulting in a higher interest rate.
“Right now we’re getting pretty good (interest) rates on short term borrowing,” Keefe said.
Knapik said that the S&P report noted that 95 percent of the city’s current debt is slated to be paid-off within 10 years.
The City Council’s Finance Committee has long embraced a policy of maintaining an annual debt service between $6 and $8 million, a policy developed to maintain the city’s capability of taking on new debt for capital purchases and infrastructure improvement projects. As bonds are retired, new bonds are sold.
While OPEB and contributory retirement liabilities were mentioned as credit weaknesses, the S&P reviewers recognized the city is mindful of and working to control that growth and reduce these liabilities going forward.
“In the past year, the city has been recognized by both Moody’s and Standard & Poor’s with bond upgrades,” Knapik said. “Our position, both from the financial management perspective and the condition of our facilities and equipment, has improved tremendously over the past few years, and we are in a much stronger position moving forward.”
The ratings agencies prepare these summaries for investors in preparation for competitive market bidding on the securities. The city’s upcoming bond offering, underwritten by Eastern Bank, will convert short-term borrowing from recent projects, including city hall renovations, building upgrades, and other local projects, to long-term debt.
“While finances remain tight, we continue to focus on our mission: providing quality and efficient city services for the City’s taxpayers,” Knapik said.
