Credit risk

Norfolk County remains a good credit risk

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Norfolk County is well positioned to fund expensive infrastructure upgrades at reasonable interest rates 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 confirmed the county’s credit rating to “AA- / Stable”. This is the rating Norfolk has enjoyed since 2015 after raking in $ 66 million in net income from the sale of Norfolk Power’s transmission system to Hydro One.

In a report to Norfolk Council on September 21, Kathryn Fanning, director of strategic financial planning and reporting at Norfolk, said it was essential for a large borrower such as Norfolk County to pay a rating agency for review his books and update his credit rating. annually.

“For municipalities that issue bonds, having an up-to-date credit rating is an absolute necessity,” Fanning said in a memo to council last week.

“Without a credit rating, the county’s debenture issues would be classified as ‘lower quality’. Institutional investors – insurance companies, pension funds, etc. – can only invest in “quality securities”.

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

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

Norfolk’s credit rating was shot in the arm in 2014 with word that the county was ready to liquidate its stake in Norfolk Power. Norfolk’s rating that year changed to A-plus / Stable, which in turn changed to the current AA-minus / Stable in 2015 once the money from the sale of Norfolk Power was in hand.

“The ‘AA’ rating tells investors that the county’s credit is considered to be of high quality,” Fanning said in his report.

The Norfolk Board received the credit update without comment at its regular September 21 meeting.

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