Tuesday, July 28, 2009

Report: Jobless rate could hurt county credit

Three new reports weigh in on the health of Mecklenburg County's economy - and whether factors like a high employment rate may make it more expensive for the county to borrow money for construction projects in the future.


The reports all generally praise the diversity of the local economy, and financial management within the county.

But they also make clear analysts are paying attention to changes locally. For example, both Moody's and Fitch note the local unemployment rate exceeds that of the nation.


Among the comments:

  • From Standard & Poor's: "The county continues to experience long-term sustainable growth of both its tax base and employment base which has provided strong operating results and subsequent reserve build-up, positioning the county with financial flexibility during economic slowdowns"
  • From Fitch: Local financial sector will "sustain continued economic growth" even with the Wachovia acquisition and “other potential industry changes."
  • From Moody's: "The full impact of the downturn in financial services has yet to be felt, and we will continue to monitor the implications for the city." Later: The county's growing and vibrant economy has historically been asignificant factor in the Aaa rating (but) protracted unemployment at the current level and a longer than average recession could challenge the county's credit profile." (Earlier this year, the agency assigned a negative outlook on all tax-backed U.S. local governments)
Mecklenburg leaders meet with the rating agencies each year, usually before the county borrows money for construction projects. All three agencies upheld the county's longstanding triple-A bond rating, which allows it to get the best interest-rates on its bonds. A downgrade of the rating could make it more costly to pay off the debt.
The county is preparing to borrow up to $100 million in bonds next month, and is restructuring some of its other debt. - April Bethea

4 comments:

barkomomma said...

"Mecklenburg leaders meet with the rating agencies each year, usually before the county borrows money for construction projects."

and

"The county is preparing to borrow up to $100 million in bonds next month..."

...but they're going to spin it that it's because of the jobless rate that the credit rating is affected.

Typical. Tax, spend and put the blame anywhere but where it belongs.

Anonymous said...

If they stop spending money on stuff that's not important the county and the city would have money. Get rid of the folks that are getting paid thousand of dollars to do nothing and we well save alot of money.

Bill said...

"Mecklenburg leaders meet with the rating agencies each year, usually before the county borrows money for construction projects."

Yeah these are the same bond rating agencies who told us that subprime mortgages were all good!

Anonymous said...

I can see it now: the credit card companies will begin to ding individuals' credit scores and ratings based on their zipcode of residence. The car insurance companies are already assigning higher rates based on where you live and they have been for years. This is all spinning waaaaaaaaaaaaaay out of control, people!!!!