Standard & Poor upgrades Opp outlook

Published 12:00 am Wednesday, October 21, 2015

Opp Mayor John Bartholomew announced Monday that Standard & Poor’s upgraded the city of Opp’s credit rating from a stable outlook to a positive one.

Standard & Poor’s announced a revised outlook on the city of Opp’s general obligation (GO) warrants to positive from stable, a company spokeswoman said Tuesday.

At the same time, Standard & Poor’s affirmed its A- rating on the city’s existing GO debt.

“The positive outlook reflects our view that the city’s available general fund balance will exceed, and be maintained at levels above $500,000 over the two-year outlook horizon,” said S&P’s credit analyst Ann Richardson.

Standard & Poor’s assigned its A- underlying rating to Opp’s series 2015A Go refunding warrants, as well.

The warrants constitute general obligations of the city for the payment of which Opp’s full faith, credit and taxing power are irrevocably pledged.

S&P said the rating for Opp reflects the company’s assessment of the following factors for the city:

• Very weak economy;

• Adequate management, with ‘standard’ financial policies and practices under our financial management assessment methodology;

• Adequate budgetary performance;

• Strong budgetary flexibility, with a low nominal available fund;

• Very weak debt and contingent liability position; and strong institutional framework score.

S&P said the positive outlook reflects its opinion that there is a 1-in-3 chance that it could raise the rating within the next two years.

Additionally, if Opp’s available general fund balance is increased and maintained at levels above $500,000 over the next year, S&P says it might consider a higher rating.

At the same time, if the city reverts back to its budgetary deficits and does not adequately adjust its budget to manage operational costs, S&P could revise the outlook to stable.

Bartholomew said he expects the rating to go to an A as soon as the city’s audit comes in.

“That is what our bond company told us,” he said.

Bartholomew said that Standard’s and Poor’s, the company that hands down credit ratings, said getting out from under the responsibility of $12 million for the airport would greatly help the city’s credit rating.


Bartholomew said asked the city council to purchase insurance for the airport bonds, which he said guarantees the bonds and makes them more attractive.

“The insurance would pick up the bond payments, if we couldn’t make the payment,” he said. “It makes our bonds more enticing.”

The bonds are being sold to pay the city’s 23 percent of the $12 million owed in airport debt.

The city of Andalusia and the county commission are doing similar.

“I, Bill (Godwin) and Earl (Johnson) said, ‘let’s break it up,’” he said.