LAKEWAY, Texas—The Lakeway Municipal Utility District has earned one of the highest bond ratings possible from Standard & Poor’s, Lakeway MUD announced.
The AA-minus rating from Standard & Poor’s, one of the top bond-rating agencies in the industry, could result in Lakeway MUD gaining lower interest rates on $5.87 million in general obligation bonds it plans to sell April 15. Proceeds from the bond sale will go toward improvement of water and wastewater services. In November 2007, Lakeway MUD voters overwhelmingly authorized the issuance of up to $13.3 million in bonds.
“Achieving an AA-minus rating from Standard & Poor’s is a testament to the financial and operational strength of Lakeway MUD,” Tom Rogers, president of Lakeway MUD’s Board of Directors, said.
Standard & Poor’s took a number of factors into consideration in its bond rating for Lakeway MUD, including financial condition and performance in a multiyear period, debt burden and district management. The ratings are used by investors to help decide whether to buy bonds, or long-term debt. AA-minus is in the upper tier of Standard & Poor’s bond ratings, with AAA being the highest.
“Lakeway MUD’s financial operations are sound,” Standard & Poor’s wrote in a report issued April 10. “The unreserved general fund balance was $3.7 million, or 85.5% of annual expenditures, at fiscal year-end 2008, which we consider strong. In addition, the debt service fund ended fiscal 2008 with a $1.2 million balance, or 33% of the maximum annual debt service requirement.”
The $3.7 million from the unreserved general fund balance will be allocated toward 18 capital improvement projects. If that money were not available, Lakeway MUD would need to borrow even more money through bond sales.
Rogers said: “In these very tough economic times, an unrestricted general fund balance of $3.7 million is something to be extremely proud of. Lakeway MUD has had the wisdom to use its resources wisely.”