Brewer bond rating shows improvement Upgrade due to diverse, growing tax base

BREWER – The city received another boost to its development efforts Friday, when Moody’s Investors Service, a New York-based credit rating agency, upgraded its bond rating from “A3” to “A2.”

The improved rating reflects Moody’s confidence in the city’s management, finances and development prospects. In its correspondence to the city, the company cited Brewer’s diverse and growing tax base, sound financial operations and manageable debt position as playing key roles in its decision.

Also Thursday, Standard and Poor’s, a Boston-based bond rating agency, assigned Brewer a similar rating of “A,” further confirming the city’s bright outlook. The Standard & Poor’s rating marks the first time the agency has evaluated the city.

The rating upgrade is considered a significant milestone for the city, which had seen its solid bond rating downgraded to the A3 level in July 1997.

“This upgrade is a clear sign that Brewer is moving in the right direction,” City Manager Stephen Bost said Friday. “This is the result of a great deal of hard work, vision and team effort from the city council and city staff. I am confident that our rating will only continue to improve.”

Mayor Michael Celli also was quick to recognize the importance of the event.

“It’s a very positive indication of the direction the city is going,” Celli said. “It shows that a commitment to economic growth and strong management pays off in dollars and cents for Brewer taxpayers.”

Brewer’s bond adviser, Joseph Cuetara of Moors & Cabot, agreed.

“The rating upgrade is a major victory for Brewer, especially given the current state of the economy and the Chapter 11 position of Eastern Fine Paper. Moody’s recognized the city’s ability to attract and retain strong management, improve its financial condition and generate aggressive yet realistic development plans and rewarded these accomplishments with an upgrade.”

The city asked for the rating review in anticipation of its Oct. 16 sale of bonds being issued to provide $4.28 million in financing for capital projects, including development of a new road parallel to Wilson Street and acquisition and design of a new public works garage on Green Point Road.

Typically, an upgrade of this nature lowers the cost to borrow money by 20 basis points, or two-tenths of a percent. Finance Director Karen McVey said that the upgrade would translate to savings for the city.

“We will pay approximately $90,000 less in interest over the 20-year life of our October bond as a result of this rating upgrade,” McVey said. “And with savings added from future bonds issues as well, that savings will be multiplied many times over.”