Excelsior, MN GO Bond Rating Raised To 'AAA' On History Of Very Strong Available Reserves

CENTENNIAL (S&P Global Ratings) Aug. 16, 2019--S&P Global Ratings raised its long-term rating to 'AAA' from 'AA+' on the city of Excelsior, Minn.'s general obligation (GO) bonds outstanding. At the same time, S&P Global Ratings assigned its 'AAA' long-term rating to the city's series 2019A GO street reconstruction bonds. The outlook is stable.
"The raised rating reflects our view of the city's track record of sustaining very strong available reserves in excess of 75% of general fund expenditures, and our view that this is likely to continue," said S&P Global Ratings credit analyst Andrew Bredeson.
The city plans to apply the proceeds of the $5.99 million series 2019A bonds to fund street and utility reconstruction projects.
The rating reflects our view of the city's:
  • Very strong economy, given its very strong wealth and income levels and location within a broad and diverse MSA;
  • Strong management, with good financial policies and practices under our financial management assessment methodology;
  • Strong budgetary performance, with operating results that we expect could improve in the near term relative to fiscal 2018, which closed with a slight operating deficit in the general fund and an operating deficit at the total governmental fund level in fiscal 2018, per our calculations;
  • Very strong budgetary flexibility, with a high available fund balance in fiscal 2018 of 174% of operating expenditures;
  • Very strong liquidity, with total government available cash at 2.4x total governmental fund expenditures and 42.5x governmental debt service, and access to external liquidity that we consider strong;
  • Very weak debt and contingent liability position, with debt service carrying charges at 5.7% of expenditures and net direct debt that is 294.7% of total governmental fund revenue; and
  • Adequate institutional framework score.
Excelsior has an estimated population of 2,364 and is located in Hennepin County, Minn.
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