The village of Riverside earlier this month had its credit rating upgraded by Standard and Poor’s, bumping it to AA+, which is just a step below the agency’s highest rating of AAA.
The upgrade came in conjunction with the village board’s plan to refinance bonds issued originally in 2005 for water system improvements, a practice it has considered annually, in part because of record-low interest rates in recent years.
On March 18, trustees voted 4-0 (trustees Jean Sussman and Lonnie Sacchi were absent from the meeting) to refinance the bond issue, which was completed March 20.
According to Finance Director Jessica Frances, coupon rates for the bond sale fell between 2 and 3 percent. Because of the bond rating upgrade, the village was able to see some savings in its annual debt service payments through the life of the bonds, which mature in 2019.
Prior to the upgrade, the village expected a savings of about $80,000. With the bond issuance on March 20, the village’s savings will be about $93,000.
“By having a higher bond rating, it affords greater savings in that investors view us as less of a risk of defaulting,” said Village Manager Peter Scalera. The upgrade also eliminated a need to buy bond insurance.
Scalera said Standard and Poor’s based its upgrade on a variety of factors, including its long-term financial and capital improvement plans and newly instituted internal reporting protocols.
“We now have a more robust reporting system, clarifying expenditures and how they should be coded,” said Scalera. “There’s also the five-year and 10-year plan that the board included in the last budget. We didn’t really have a plan like that before.”
In 2011 when Riverside refinanced a bond issuance, the credit rating service Moody’s set the village’s credit rating at Aa2. The Standard and Poor’s rating is a step up from that ranking.