Date: Fri 20-Aug-1999

Publication: Bee

Author: STEVEB

Quick Words:

bond-rating-Spragg-Moodys

Full Text:

Town Seeks To Upgrade Its Bond Rating

BY STEVE BIGHAM

Ben Spragg plans to visit Wall Street next month in an effort to improve

Newtown's bond rating with Moody's Investment Service.

Newtown's finance director is hoping he can raise the town's A-1 rating to a

AA-3 rating, which would reflect lower interest rates for all borrowing. That

would certainly come in handy these days as the town faces what could be more

than $50 million worth of capital projects. There are the municipal space

needs of the town, which requires a new town office space, new fire department

and new police station. There is also a need for a new school for fifth and

sixth graders, and the Parks & Recreation Commission is expected to come in

with significant requests in the coming years.

"It's going to be huge bucks and we already owe huge bucks," noted Legislative

Council member Melissa Pilchard.

Newtown has never had a AA3 rating, so it seems odd that the town would go

after an upgrade at a time when the town's debt per capita is one of the

highest in the state. But, as Mr Spragg explains it, the climate is just right

for a Moody's upgrade. The finance director is also seeking to refinance two

of the town's outstanding bond issues.

"In the past, there was always the unknown," Mr Spragg said. "The unknown was

what kept us from getting it. There was always the question of sewers and how

are you going to pay for them. But the sewers are now in, the assessments are

in place, and collections are coming in."

Mr Spragg last met with Moody's in 1996 when the town floated a bond for the

construction of Newtown High School. At the time, Newtown had not finalized

borrowing for the sewers.

Moody's rates each community based on debt ratios and a handful of other

benchmarks, according to Mr Spragg. In other words, what is the town's

willingness and ability to repay its debt.

"The only debt ratio we exceed of Moody's guidelines is debt per capita," Mr

Spragg said. "Because our population is only 20,000, when you do things on a

per capita basis, those ratios are going to exceed guideline. However, within

three years, based on our existing debt, we'll be back within the guidelines

because each year we're paying off debt."

Mr Spragg was scheduled to make a presentation to the Legislative Council's

finance committee Thursday night. He is expected to travel to New York with

First Selectman Herb Rosenthal and a high-ranking official from People's Bank.