Springfield Township, PA GO Rating Raised To #AA# On Improved Financial Position, General Fund Performance, Debt Profile

Stocks and Financial Services Press Releases Wednesday March 21, 2018 09:34
CHICAGO--21 Mar--S&P Global Ratings

CHICAGO (S&P Global Ratings) March 20, 2018--S&P Global Ratings raised its long-term rating and underlying rating (SPUR) to 'AA' from 'AA-' on Springfield Township (Bucks County), Pa.'s existing general obligation (GO) bonds. The outlook is stable.

"The raised ratings reflect our view of the township's strengthened financial position and general fund performance, along with an improved debt profile, which continues to moderate as debt is retired," said S&P Global Ratings credit analyst Kathryn Clayton.

The GO ratings reflect our view of the following factors for the township:
  • Very strong economy, with access to a broad and diverse metropolitan statistical area;
  • Strong management, with good financial policies and practices under our Financial Management Assessment methodology;
  • Adequate budgetary performance, with operating results that we expect could deteriorate in the near term;
  • Strong budgetary flexibility, based on available cash reserves as a percentage of operating expenditures;
  • Very strong liquidity, and access to external liquidity we consider strong;
  • Strong debt and contingent liability profile, as well as low overall net debt and rapid amortization; and
  • Strong institutional framework score.

The stable outlook reflects our view of the township's very strong local economy, which continues to be stable. It also reflects effective management that has been able to sustain cash reserves at a healthy percentage of expenditures, thereby supporting the township's strong budgetary flexibility and very strong liquidity. Given our expectation of stability in both the economic indicators and the financial profile, we do not expect to change the ratings within the two-year outlook period.

If all other rating factors remain stable, if the township is able to improve available cash reserves to a level that is comparable to those of higher-rated peers both as a percentage of the budget and nominally, and maintain them at that level, we could consider a higher rating.

We could lower the ratings if the township's budgetary performance were to deteriorate, resulting in a weakened liquidity or budgetary flexibility position. Additionally, if the township issued a significant amount of debt that materially increased fixed costs or long-term liabilities, we could consider a lower rating.

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