The city of Garland and Garland Power & Light (GP&L) have earned positive bond ratings from Fitch Ratings, Standard & Poors and Moody Investors Service.
Fitch Ratings has assigned a AAA rating to the city of Garland’s $16.7 million combination tax and revenue certificates of obligation, series 2020, which is the highest bond rating possible. Further, Fitch considers the city’s rating outlook as stable.
Fitch’s analysis indicates its expectation that the city will be able to maintain healthy financial flexibility through economic cycles, including the current downturn as a result of the coronavirus pandemic. Fitch cites Garland’s broad budgetary tools, supplemented by a healthy reserve position, in addition to its diverse revenue base.
Fitch has also assigned a favorable AA- rating to Garland Power & Light’s revenue refunding bonds, series 2020, and reports that GP&L is a competitive power provider with low operating risk and a stable financial profile.
In addition, Standard & Poor’s assigned the city an AA+ for tax-supported debt, while Moody’s Investors Service gave an Aa3 rating for Electric Bonds.
Quality bond ratings and stability outlooks allow the city to issue debt for capital projects at a lower cost, saving taxpayers money.
BOND RATINGS are independent, forward-looking opinions on the creditworthiness of a bond issuer. They are for bonds and bond issuers what credit scores are for humans. Just as credit bureaus evaluate your assets and liabilities, such as income and debt, rating agencies will look at an issuer’s balance sheet to determine its ability to repay its obligations on time and in full. And just like credit scores are intended to communicate your creditworthiness to potential creditors, bond ratings are intended to communicate the creditworthiness of issuers to potential creditors.
HOW THEY WORK: Instead of the numerical grade of credit scores, bonds are given letter grades. They slide from Aaa or AAA down to C or D. The important thing to understand about how bond ratings work is that the lower down the scale you go, the weaker the issuer’s financial strength is deemed to be.