HEFLIN — The Heflin City Council voted unanimously to change its credit rating agency from Standard & Poor’s to Moody’s during a Tuesday night meeting.
The move to change the credit agency is one of many financial moves by the city to improve the city’s credit rating which was downgraded by Standard & Poor’s from a A to a BB plus in recent years — a five-notch drop.
Jason Grubbs with the Frazer Lanier Company — an investment banking firm that offers services to public and private clients by serving as an underwriter and placement agent of tax exempt and taxable bonds — spoke to the council about the importance of improving the city’s credit rating.
“If you’re able to refinance those prior bonds that were issued to the city, there’s considerable savings there, considerable savings being hundreds of thousands of dollars that could potentially be saved by doing nothing else by just swapping those high rates for low rates,” said Grubbs.
Grubbs called the city’s lower rating by S&P a “significant downgrade.”
“At that level of a rating there is really not an opportunity to do anything with your prior financings because those bonds were issued based upon an A interest rate,” said Grubbs.
Since the mayor has been in office new financial policies have been implemented to help bolster the city’s chance at getting its credit rating back into good standing.
Grubbs said the amount of spending and low level of cash in the past was a determining factor in the city’s downgrade. He said changing credit rating agencies is an opportunity for the city to start with a clean slate. It’s harder to go up in credit rating than to go down and the move to another agency would hopefully be a new beginning, he said.
The mayor said a savings of $1.2 million can be made on just one of the city’s bonds if it can be refinanced to a lower rate.
“I think I’ve got all of our financials in pretty good shape if you look at the budget, we’ve done everything we can do guys, there’s not much else that we can cut or do to get us back on track ... to get this ship turned around,” said Brown.
The resolution passed by the council gives Grubbs authority to seek refinancing of the city’s bonds and present the figures to the credit rating agency. Grubbs will return to the council with the city’s hopefully new credit rating and ask for approval to move forward to sell the city’s bonds.