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The city council heard that message Thursday night when financial adviser Ann Burger Entrekin of First Southwest Company made a presentation recapping the city’s current debt situation.
The council had asked Entrekin to advise it on financing needed equipment purchases in its capital improvement plan, designated to be paid for with a $500,000 loan from a local bank through the recently approved 2008-09 budget.
“I can’t recommend issuance of any new bonds at this time,” Entrekin said. “You might look at it again after the first of the year.”
Cuero’s current debt includes both tax supported and revenue supported debt totaling about $7.5 million.
Entrekin said there was good news for the city.
“One of the really nice things that has happened recently is that Standard & Poor’s has upgraded the city to an A rating,” Entrekin reported. “Before that you were at a BBB rating, one of the lowest.”
“Your rating in the broadest terms in based on your willingness and ability to repay,” Entrekin said. “Administration and management, finances, debt and the economy are also factors.”
Entrekin said recent happenings in the municipal bond industry also helped dictate the upgrade in part.
“What the rating agencies have done is move from a separate municipal bond scale and a corporate bond scale toward a more global scale so investors will know how they are rated compared to one another,” Entrekin explained.
Entrekin also talked about the decline of the municipal bond insurance market.
“The future of municipal bond insurance is very uncertain. Your upgrade to an A rating is extremely important, because the probability that you are going to be seeking bonds on your A rating is much more likely than having the benefit of municipal bond insurance.”