Oconto, WI GO Debt Rating Raised To 'A+' On Restored General Fund Reserves

CHICAGO (S&P Global Ratings) May 17, 2019--S&P Global Ratings raised its long-term and underlying ratings on Oconto, Wis.' general obligation (GO) promissory notes to 'A+' from 'A-'. The outlook is stable.
"The higher rating reflects our view of the city's restoration of general fund reserves through the reduction of questionable receivables, maintenance of a positive adjusted general fund balance, and tax base growth," said S&P Global Ratings credit analyst Andrew Truckenmiller, "and we expect it to continue to build on its general fund available reserve position based on unaudited results for fiscal 2018 and budgetary expectations for fiscal 2019." Based on conversations with management, the city has made substantial steps in correcting underperforming funds that have historically required loans from the general fund. Therefore, we expect the city's budgetary flexibility to continue to improve through positive operations and further reductions of interfund receivables.
The city's GO pledge secures bond debt service.
Oconto, with an estimated population of 4,456, is in Oconto County on the shores of Lake Michigan in northeast Wisconsin, approximately 30 miles north of Green Bay.
"The stable outlook reflects our opinion that Oconto will maintain at least strong available reserves and very strong liquidity over the two-year outlook timeframe," added Mr. Truckenmiller. We do not expect to change the rating during the next two years because we expect the city to maintain at least adequate budgetary performance and reserves above a level we consider low on a nominal basis.
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