Elgin’s strong fiscal management confirmed with another AAA bond rating

  • February 27, 2015
  • Carol Gieske

The city of Elgin once again received an AAA bond rating from Fitch Ratings, confirming the city’s strong fiscal management. Fitch Ratings is one of three nationally-recognized statistical rating organizations (NRSRO) approved by the U.S. Securities and Exchange Commission.

According to Fitch, Elgin’s rating was based on the city’s strong fiscal management, diversified revenue streams, modest debt burden, a recent rebound in development and benefit changes aimed at improving the city’s pension funding levels.

“Credit ratings are the only objective, fact-based criteria in local government that provide feedback—not only in how the city manages its finances—but on the quality of the underlying policy decisions made by the city council,” said Elgin City Manager Sean R. Stegall. “We are especially pleased that we received this ranking from Fitch as it is the gold standard for municipal credit ratings.”

Fitch’s credit rating scales range from AAA to BBB for municipalities found to be of relatively low to moderate credit risk; and BB to D for those that signal a higher level of credit risk or default.

Elgin’s AAA bond rating from Fitch Ratings and AA+ from another of the three NRSROs—Standard & Poor’s Rating Services—continue to serve as distinguishing factors in the city’s efforts to both retain and attract regional, national and multinational businesses. The stability and consistency the city’s financial ratings represent is the strongest signal of assurance the city can issue to the business community that their investments in Elgin are being made in a sound economic environment.

The AAA bond rating recognized the city’s stable outlook as it relates to the city’s $88 million in general obligation bonds and $5 million in revenue bonds. Of the two types of bonds issued to municipalities, general obligation bonds are issued based on the belief in the municipality’s ability to repay its debt according to its credit and taxing power. Revenue bonds are backed by a specific income source of the issuer, in Elgin’s case, the Illinois Finance Authority (IFA).