Cumberland's credit rating gets another boost from Moody's

Cumberland's credit rating gets another boost from Moody's

CUMBERLAND - The town's credit rating is up again following a new review by Moody's Investment Service issued July 23.

The upgrade takes Cumberland from A1 to Aa3, the firm announced, in part because of the new agreement with unionized police officers that reduces the liabilities of the police pension fund and other post employment benefits.

The rating applies to $5.98 million in 2004 bonds that will be refinanced - called refunding - for a savings of $246,600.

Finance Director Brian Silvia also says the new credit rating, combined with a market upswing, will make possible another refunding option on 2006 bonds that have $2.2 million in outstanding principal.

A Town Council vote on both refunding options is expected soon, he said.

In stamping Cumberland with the higher rating, Moody's noted a "recent trend of structurally balanced operations resulting in adequate reserve levels," along with above-average socioeconomic indices and manageable direct debt levels. It also noted the town "reduced locally administered pension liabilities as a result of recent reforms."

Moody's said the town faces the challenge of maintaining a structural balance including "full pension funding," continuing to address outstanding advances to the water and sewer departments, and the limited "revenue raising flexibility" due to "self-imposed tax cap limits."

Aa ratings are judged by Moody's to mean bonds sold by the town are "of high quality and subject to very low credit risk."

Last year's A rating meant the town's bonds were considered "upper-medium grade and subject to low credit risk."

Since McKee has taken office, Cumberland's credit rating has improved eight notches from a low of Ba2 in 2000 to Aa3. And until last summer, Cumberland's report was marred by a "negative outlook" because of concerns about the pension fund and borrowing by the water and sewer departments.