The Bull City’s upcoming projects will be a little easier on taxpayers’ wallets, thanks to Durham’s financial reputation.
The three largest bond rating agencies—Standard & Poor’s, Fitch Ratings and Moody’s Investors Service—all awarded Durham an “AAA” bond rating, renewing the designation the city received in 2008.
“It’s just a combination of a lot of factors that [the bond rating agencies] use to determine the rating, they look at the strength of the overall economy in the area,” City Manager Tom Bonfield said. “Also, how consistent we’ve been with paying off debt, and how much we have, and all of those things are very positive for us, so as a result we are a very, very, very credit-worthy municipality.”
Bonfield said the city’s “AAA” rating, the highest possible mark, means Durham will be able to borrow money at much lower interest rates than other municipalities, which is particularly useful for big capital projects. He added that the length of time between credit ratings varies but they are generally given when a municipality is anticipating issuing debt.
“We’re getting ready to do some refinancing, so that’s why we put up a credit application with the agencies,” he said. “We’ll usually ask for [a credit rating] every one or two years.”
Junior Will Passo, Duke Student Government vice president for Durham and regional affairs, said Durham’s high rating is a “great achievement, especially in the current economic climate.”
Passo added that the city’s “AAA” designation will be beneficial to the University as well. Fewer than 25 municipalities nationwide currently hold “AAA” bond ratings from all three major agencies, according to a Durham news release Sept. 29.
“We all know that Duke provides a lot into the Durham economy, so obviously you want the Durham economy to be thriving, we want Durham to do well,” Passo said. “Basically it means the University isn’t hampered as much as other colleges are in dealing with the city [they are in], it’s not as hampered by the economic crisis. I’m not surprised, given the job market here is really stable.”