Valparaiso, IN GO Rating Raised To #AA# On Very Strong Available Cash Reserves

Stocks and Financial Services Press Releases Tuesday July 3, 2018 17:47
CHICAGO--3 Jul--S&P Global Ratings

CHICAGO (S&P Global Ratings) July 2, 2018--S&P Global Ratings raised its rating to 'AA' from 'AA-' on Valparaiso, Ind.'s unlimited-tax general obligation (GO) debt outstanding. At the same time, we assigned our 'AA' rating to the city's series 2018 GO bonds. The outlook is stable.

The series 2018 bond proceed will be used to finance renovation projects at the city hall.

"The raised rating reflects our view of the city management team's ability to maintain a very strong level of available cash reserves, which provides them with financial flexibility to finance certain capital needs with funds on hand, enabling a very strong overall debt and contingent liability profile," said S&P Global Ratings credit analyst Kathryn Clayton.

The 'AA' rating reflects our assessment of the following factors for the city:
  • Strong economy, with access to a broad and diverse metropolitan statistical area (MSA);
  • Adequate management, with standard financial policies and practices under our Financial Management Assessment methodology;
  • Strong budgetary performance, with operating surpluses in the general fund and at the total governmental fund level in fiscal 2017;
  • Very strong budgetary flexibility, based on the available cash reserve as a percentage of operating expenditures in fiscal 2017;
  • Very strong liquidity, and access to external liquidity we consider strong; Very strong debt and contingent liability profile, as well as rapid amortization; and
  • Strong institutional framework score.

The stable outlook reflects our expectation that the city's management will continue to make budgetary adjustments as necessary to produce balanced operations that support the city's very strong budgetary flexibility and liquidity profiles. Additionally, we expect the city's proximity to the Chicago-Naperville-Elgin MSA will provide stability in the local economy in the near term. As a result, we do not expect to change the rating within the two-year outlook period.

If the city's budget begins to show signs of stress, and the budgetary performance deteriorates or budgetary flexibility or liquidity weaken, we could consider a lower rating.
If economic indicators improve to levels we view as commensurate with those of higher-rated peers while all other factors remain equal, we could raise the rating.
Valparaiso, with an estimated population of 33,274, is located in Porter County, about 55 miles southeast of downtown Chicago.

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