PRESS RELEASE DETAIL
For release: IMMEDIATELY
Release Date: 04/08/2016
Standard & Poor’s affirms Baton Rouge’s bond rating at AAA
Mayor-President Melvin L. "Kip" Holden announced today that Standard & Poor’s Rating Services has affirmed its AAA bond rating for the City of Baton Rouge. AAA is the highest possible rating offered by S & P, and will apply to the three City-Parish sales tax-secured bond issues totaling $47 million.
The low-interest rate resulting from S&P and the city’s other bond rating today will save the City-Parish about $5 million by refinancing two bond issues totaling approximately $42 million. The third bond issue will finance improvements to airport parking garage and other repairs.
In an explanation of its rationale for the rating, S & P said Baton Rouge – which serves as a regional economic center for more than 800,000 people – has a diversified economy that has grown in recent years despite bad times in the local petrochemical industry.
“City officials indicate that the state's economic stress, driven in part by weakness in the oil and gas sector, has not had a marked effect on Baton Rouge's economy,” said the S & P report, noting that there has been a continued investment in the city's downtown core, health care sector, and residential and commercial development.
And the report noted that modest economic growth is expected to continue in the future.
“In our view, per capita retail sales are a very strong 161 percent of the national level, reinforcing Baton Rouge's role as a regional economic hub,” S & P said noted that East Baton Rouge Parish’s unemployment of 5.07 percent for 2014 was lower than both the state and U.S. rates of 6.4 percent and 6.2 percent, respectively.
The report noted that city officials have conservatively budgeted for a 1.5 percent sales tax revenue increase but noted that based on current trends, the actual growth will likely exceed the estimate.
Mayor Holden applauded the AAA rating, noting that it will mean continued low interest rates that will ultimately save taxpayers money on future bond issues
“We fiercely protect our bond rating because of its impact on our budgets, and we have worked to keep our local economy strong during even the most difficult economic times,” the Mayor said. “Our rating shows Wall Street's confidence that Baton Rouge is on the right track."
Baton Rouge has the only AAA sales tax rating in Louisiana, and there are less than 50 nationwide, according to Gordon King, the city’s financial advisor. He said the AAA rating is higher than the S&P’s rating for both the state of Louisiana and the United States government.
King credited the S&P rating in part to the vision of Mayor Holden and the leadership of the City-Parish Finance Department.