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Norfolk County remains good credit risk

Norfolk County is well-positioned to finance expensive infrastructure upgrades at reasonable rates of interest thanks to a positive credit-rating outlook from Standards and Poor’s Global Ratings.=

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Earlier in September, S&P Global Rating’s affirmed the county’s credit rating at “AA-/Stable.” This is the rating Norfolk has enjoyed since 2015 after it socked away $66 million in net returns from the sale of the Norfolk Power transmission system to Hydro One.

Distroscale

In a report to Norfolk council on Sept. 21, Kathryn Fanning, Norfolk’s manager of strategic financial planning and reporting, said it is essential for a large borrower such as Norfolk County to pay a rating’s agency to go over its books and update its credit rating annually.

“For municipalities that issue debentures, having an updated credit rating is an absolute necessity,” Fanning said in a memorandum to council last week.

“Without a credit rating, the county’s debenture issues would be classified as a ‘non-investment grade security.’ Institutional investors – insurance companies, pension funds etc. – can only invest in ‘investment grade securities.’

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“Without a credit rating, a market may not be readily available for the county’s debenture issues. Non-investment grade securities carry a premium interest cost to the county. The potential savings in interest costs on the county’s annual debt payments more than offset the annual cost for updating the credit rating.”

S&P Global Ratings has been assessing Norfolk’s debt worthiness since 2001. From 2002 to 2012, the county’s rating was “A/Stable.”

Norfolk’s credit rating received a shot in the arm in 2014 with word that the county was prepared to liquidate its interest in Norfolk Power. Norfolk’s rating that year rose to A-plus/Stable, which in turn increased to the present AA-minus/ Stable in 2015 once the cash from the Norfolk Power sale was in hand.

“The ‘AA’ rating tells investors that the county’s credit is considered high grade,” Fanning says in her report.

Norfolk council received the credit update without comment at its regular meeting on Sept. 21.

 
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