Orem, UT GO Bond Rating Raised To 'AA+' On Economic Growth, Strong Financial Performance

CENTENNIAL (S&P Global Ratings) Feb. 4, 2019--S&P Global Ratings raised its 
long-term rating to 'AA+' from 'AA' on Orem, Utah's general obligation (GO) 
bonds outstanding. The outlook is stable.

"The raised rating reflects our view of the city's economic growth, spurred by 
growth in the technology sector," said S&P Global Ratings credit analyst David 
Mares. "The city has utilized this growth to maintain a strong financial 
performance and very strong budgetary flexibility in recent history," Mr. 
Mares added. 

The rating further reflects our view of the city's:
  • Adequate economy, with access to a broad and diverse metropolitan statistical area (MSA);
  • Strong management, with "good" 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 2018;
  • Very strong budgetary flexibility, with an available fund balance in fiscal 2018 of 28% of operating expenditures;
  • Very strong liquidity, with total government available cash at 94.9% of total governmental fund expenditures and 7.6x governmental debt service, and access to external liquidity we consider strong;
  • Adequate debt and contingent liability position, with debt service carrying charges at 12.5% of expenditures and net direct debt that is 57.6% of total governmental fund revenue, as well as low overall net debt at less than 3% of market value, but significant medium-term debt plans; and
  • Very strong institutional framework score.
The city, with an estimated population of 93,832, is located in Utah County in 
the Provo-Orem, UT MSA, which we consider to be broad and diverse. The city of 
Orem is located within Utah County and is the fifth-largest city in the state 
of Utah. The city has experienced economic and population growth in recent 
history, due in part to a growing technology sector. The city is additionally 
anchored by Utah Valley University, the largest public university in the 
state.