Judge Doyal: County Credit Rating Saves Taxpayers in Recent Bond Sales

CONROE, TX -- A strong county bond rating and a receptive bond market enabled Montgomery County to sell its road bonds at lower than projected interest rates - saving money for taxpayers, said Montgomery County Judge Craig Doyal.

The county issued about $47.7 million in refunding bonds, and sold another $73.8 million in road bonds, from the $280 million in bonds authorized by voters in November 2015.

Judge Doyal announced that by refinancing its existing debt the county was able to save taxpayers $4.74 million over the life of the existing bonds. As for the new road bonds being sold, the county sold them at a lower interest rate thanks to the recent increase in the county’s credit rating by Moody’s; the ratings agency increased the county’s rating to "Aaa" – the highest possible - reducing the interest costs by nearly $1 million over the life of the bonds.

Investors paid the county a premium to purchase these recent bonds. For example:

* In its road bond sale, the county sold $73.8 million in bonds to generate $80.4 million in capital to fund road projects -- meaning investors paid more than $6.6 million over "face value" to purchase the bonds. As a result, the county was able to reduce the amount of bonds issued and will only have to pay interest on $73.8 million in debt.

* In its refinancing, the county sold $47.8 million in bonds, but was able to pay off $48.9 million in debt.

Moody's earlier this month awarded Montgomery County the highest-possible credit rating of Aaa; Standard & Poors maintained its current rating of AA+. The ratings were based in part on the county's "conservative" budget and fiscal practices, according to statements by both ratings agencies. The ratings agencies also noted the county's strong economy and positive economic forces that should help the county continue its strong population growth and expansion of its tax base.

Standard & Poor's 'AA+' rating is the 2nd highest among 19 possible ratings, while Moody's Texas' assigned the county a rating of Aaa – the highest rating possible. It means the county's rating is either equal to or superior to ratings for counties comparable in size in the Harris County region, such as Fort Bend, Brazoria and Galveston.

"It is important for Montgomery County to take every possible opportunity to save taxpayer dollars on this road bond and our existing debt, and we were able to do so by having a strong credit rating when we went to market on these bonds," said County Judge Craig Doyal.

"This is in keeping with our pledge to conservatively manage this road bond project and our debt to be accountable to our taxpayers and protect their interests, keeping costs as low as possible."

John Robuck, the county’s financial advisor, said “The rating upgrade by Moody’s Investors Service from “Aa1” to “Aaa” will help reduce the County’s interest rates and borrowing costs when issuing debt.

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