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MOUNT WASHINGTON - When Moody’s Investors Service downgraded nearly $7 million in Mount Washington general obligation bonds over the summer city officials sought a second opinion from Standard and Poor's Ratings Services.
Five months after Moody's downgraded the municipal bonds from Aa3 to A1 city officials were thrilled when Standard and Poor's recently gave the bonds an A+ rating.
The city initially sought Moody’s rating after the Mount Washington City Council voted to consolidate and refinance two general obligation bonds in order to get a lower interest rate.
The two bonds which make up the city's $7 million debt, known simply as 2002A and 2003B, stem from 2002 and 2003 when the city consolidated loans from eight financial institutions.
The bonds were originally rated A2 and were upgraded when Moody’s recalibrated all municipal debt to AA3 in 2010.
Financial advisor Joe Lakofka of Lexington-based regional investment banking and securities brokerage firm Ross Sinclaire & Associates, who has been working with city officials to refinance the general obligation bonds, originally estimated the city would save around $390,000 over 10 years.
Upon the recent sale of the bonds Mount Washington officials were pleasantly surprised to find the city will save more than three times Lakofka's original estimate.
Mount Washington Mayor Joetta Calhoun said refinancing the general obligation bonds would save the city around $1,235,000 over 10 years, which breaks down to a net $110,000 per year for the city.
"This is great news for the city," said councilwoman Sandi Hockenbury.
Calhoun said she was very pleased with the bond sale, especially considering the bad press the city received when Moody's announced the rating downgrade in July.
"Looks like we didn’t need Moody’s after all. Standard and Poor’s rating of the city and positive statements about city management took care of Moody’s bad comments," Calhoun said. "(City treasurer Peggy Brinkman), (city clerk Dawn Fick) and I have been dancing in the street...We have been vindicated."