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Johnson County retains triple-triple rating in latest bond issues

Amid the unparalleled economic impacts caused by the COVID-19 pandemic crisis, Johnson County announced Thursday (July 23) it has maintained the top AAA bond ratings with stable outlook from all three major rating agencies: Standard & Poor’s, Fitch Ratings and Moody’s Investors Service.

The announcement was shared with the Johnson County Board of Commissioners in the approval, issuance and sale of two bond series, totaling slightly more than $105 million with a debt service of up to 20 years. There were two parts to the bond issuance for Johnson County Wastewater. One part was new bonds for the construction of the Tomahawk Creek Wastewater Treatment Plant and the second part was to refund existing debt at lower interest cost. 

The triple-triple rating allows the county to issue bonds at the lowest possible interest rate—saving millions of dollars for county taxpayers in long-term public investments. Johnson County is one of only 42 counties out of more than 3,000 counties in the nation to receive the highest rating from all three agencies.

“Our ability to maintain top-tier financial ratings while we navigate this global pandemic speaks to our responsible fiscal management and resilient local economy,” said Ed Eilert, chairman of the Johnson County Board of Commissioners. “Retaining our Triple AAA ratings allows us to continue saving taxpayer dollars. It’s a win-win situation for county government and for our community.”

Thursday’s sales included General Obligation Internal Improvement and Refunding Bonds Series 2020A for $95.7 million plus a $7.4 million premium. The winning bidder was Piper Sandler & Co. and the true interest cost for the debt over 20 years is 1.52%.  These proceeds funded approximately $71 million for the new Tomahawk Creek Wastewater Treatment Plant, $16 million for 12 other wastewater capital projects and the remaining $15.3 million was sold to take advantage of the market to refund two prior general obligation bond issues.  By refunding existing bonds originally sold to finance wastewater projects, Johnson County will be able to save approximately $2 million dollars. 

At the same time, Johnson County sold Taxable General Obligation Refunding Bonds, Series 2020B, for a par amount of $9.4 million with a $725,000 premium. The winning bidder for these bonds was Fifth Third Securities and the true interest cost was 1.13%. There were 13 different bidders for these bonds. The net present value savings was 13.88% and the net cashflow savings over the remaining debt service is $1.3 million. 

The bond ratings help determine the ease with which the county can borrow money and the interest rates it pays. The better the rating, the better terms it gets on its money. 

Johnson County has maintained a triple-triple benchmark since 2010 and has saved an estimated $21 million by refunding existing debt service as a result of the top bond ratings since then.

“While Johnson County has had AAA ratings for several years, we never take it for granted,” said County Manager Penny Postoak Ferguson. “The professional review shows we remain in the top two percent of counties nationwide in developing sound fiscal policies, budgeting conservatively and finding ways to do more with less on behalf of our residents.” 

In their reports, the rating agencies cited the county’s strong financial operations supported by conservative management, strong revenue and expenditure frameworks, established fiscal policies and manageable debt burden. All three rated the county financial outlook is stable.

Fitch Ratings also noted the county has “the highest gap closing ability and financial flexibility to address the current pandemic related economic downturn.” 

Similar assessments were echoed by the other two rating agencies.

“The county serves as the economic engine for the state and is positioned to remain in expansion mode given the strength of the underlying economy and steady demand for residential and commercial property.” – Moody’s Investors Service.  The agency also noted Johnson County’s long-term trend of well-managed finances and maintenance of healthy reserves. 

“Recent market value growth supports major revenue stream growth; coupled with very strong fiscal management, this has allowed for the maintenance of adequate budgetary performance and very strong budgetary flexibility and liquidity. –  Standard & Poor’s

The board unanimously approved both refunding bond sales in separate votes. Johnson County will be refunding several series of PBC bonds the first week of August. 

The rating actions from the three rating agencies and other documents relating to the two bond sales can be found online at https://boccmeetings.jocogov.org/OnBaseAgendaOnline/Meetings/ViewMeeting?id=6338&doctype=1.


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