Moody’s Investor Services issued a Aa3 rating to JISD on Monday and upgraded the district’s general obligation unlimited tax (GOULT) rating to Aa3 from A1.
“Moody’s is a credit rating agency,” said JISD Business Manager Mike Wood. “They rate the credit risk of entities, which is the risk that the entity will default on their obligations (bonds, etc). The higher the rating, the better. Investors that invest their money in bonds of entities with a higher credit risk (a lower rating) expect a higher rate of return. So, if you have a good credit rating you should have a lower interest rate. Moody’s examines a company’s financial statements along with other economic data, and then rate the company. The stronger a company is financially, the higher the rating. They increased our rating one level. This should translate into lower interest payments if we were to ever issue new bonds or refinance our current bonds.”
JISD Superintendent Rob Barnwell added “Our business and finance department do a great job on our savings and spending, tax rates, audits, etc, which helps us get better interest rates. This rating would help us if we were to pass a bond election, regarding the interest rates we’d be able to get, but we are not planning any at this time.”
According to Moody’s, the Aa3 issuer rating incorporates Jefferson ISD’s strong reserve and cash position that is expected to remain healthy despite plans to cash fund future capital projects. The rating also reflects low long-term liabilities and fixed costs with no plans for additional debt. Lastly, the rating reflects a moderately concentrated economy with weak resident income and wealth levels. The Aa3 rating assigned to the district’s GOULT bonds was upgraded one notch because it is equivalent to the Aa3 issuer rating given a pledge of an unlimited property tax that is dedicated for debt service and levied on all taxable property within the district