Fitch Assigns Montgomery’s General Obligation Bonds a AAA Rating

Fitch Ratings has assigned Montgomery County a AAA bond rating as the county prepares to sell $821.87 million in general obligation bonds in a competitive bond sale on November 6. The article in Market Watch identified the following key factors as rating drivers:

HEALTHY FINANCIAL FUNDAMENTALS: Montgomery County has a sophisticated management team that uses conservative budgeting and has established debt and reserve policies that have resulted in healthy reserve and liquidity levels.

SOLID OPERATING PERFORMANCE: Strong operating results in fiscals 2011 through 2013 have materially enhanced the county’s reserve position. Fitch believes operations will remain positive and in line with the county’s plans.

BALANCED FISCAL PLAN: The county has adopted a multi-year fiscal plan that balances current resources against spending and continues to address other critical operating priorities relating to fund balance replenishment, pay-as-you-go capital, and other post-employment benefits (OPEB).

STRONG ECONOMIC CORE: The stable regional economy is anchored by the extensive presence of the federal government and related contracting employment, marked by consistently low rates of unemployment, a highly skilled labor force, and very high income metrics.

DEBT REMAINS MODERATE: Debt ratios are expected to remain at a moderate level despite some pressure from future bond issuance plans to fund the county’s capital improvement program (CIP). The county has prudently managed its exposure to other long-term liabilities related to pension and OPEB.

The article also addresses other factors that were considered:

  • Continued strong financial performance
  • Economic performance remains very strong
  • Sharp improvement in reserves
  • Fiscal plan addresses key priorities
  • Debt to remain affordable despite sizable annual issuances