Moody’s Investors Service has upgraded the City of Rio Rancho’s general obligation unlimited tax (GOULT) rating to Aa2 from Aa3, which translates to savings for taxpayers.
Strong financial performance and improved financial policies earned the upgraded rating, according to a city news release.
“Bond or credit ratings are a way to assess an organization’s financial well-being, and ratings can affect how the city borrows money,” according to the release. “Additionally, investors use bond ratings as a risk assessment tool for investing and buying the city’s bonds.”
This rating indicates the city is a highly desirable and more financially sound investment for investors. The city can then get better terms for bonds, which saves money, making more funds available for services.
“During the pandemic, under the guidance of city staff, I sponsored a resolution to increase our reserve levels to 25 percent and also advocated for the voters to be given the opportunity to create a permanent fund, which drew strong community support,” said Mayor Gregg Hull in the release. “As a result of these fiscally responsible policies, we will now be able to invest more of our tax dollars in city services as opposed to paying interest to banks on our debt.”
The noted reason for Moody’s upgraded rating stems from the city’s policy increasing cash reserves from 15 percent to 25 percent during the pandemic due to the uncertain economic outlook, according to the city. Also, Moody’s noted that the city’s creation of a permanent fund, which was approved by voters in March, was another reason.
According to Moody’s, other factors that led to the upgrade include Rio Rancho’s large and growing economy that will benefit from Intel Corp.’s major expansion and a manageable debt burden supported by rapid principal amortization. Moody’s noted that pension liabilities are elevated, but expected to benefit from recent legislative reform to the Public Employees Retirement Association.