The Town of Lexington recently issued municipal bonds in the amount of $33,940,000 and received the highest rating of ‘Aaa’ from Moody’s Investors Service.
Municipal bond ratings are used by investors to assess the Town’s creditworthiness to raise money for various municipal projects like schools, infrastructure, buildings, etc. Lexington’s ‘Aaa’ rating indicates the Town’s strong ability to meet its financial obligations.
Benefits of having a high bond rating
The Town’s ‘Aaa’ bond rating comes as a result of having extremely well-managed finances and financial planning, and it comes with some benefits:
Lower borrowing costs
When a municipality has an ‘Aaa’ rating, it is considered a low-risk borrower, and investors are more willing to invest in their bonds. As a result, municipalities can raise money at a lower cost than those with lower ratings, which can save them millions of dollars over the life of the bonds.
Access to a wider pool of investors
An ‘Aaa’ rating signals to investors that the municipality is financially stable and less likely to default on its obligations. This can help attract a broader range of investors, including institutional investors, such as pension funds and insurance companies, who may be restricted to investing only in highly-rated bonds.
A high bond rating enhances the reputation of the municipality, which can increase the confidence of its citizens, businesses, and other stakeholders in the government's ability to manage public finances responsibly. This can lead to increased economic development and investment in the community.
View the credit opinion from Moody’s Investors Service.