A2 A-Okay, Moody's says

The city of North Bay will likely retain its favourable A2 credit rating status, an official with Moody’s Investors Service says.

David Rubinoff, a vice president/senior analyst for the Canadian arm of Moody’s, said the company is now preparing an update on the city, but he doesn't anticipate the rating will be downgraded.

“At the present time, the A2 outlook is still stable because North Bay’s administration is effectively managing the city’s capital program, and as a result of that their debt issuance is on track with their longer term plan,” said Rubinoff, who analyses local governments and provinces for Moody’s.
“So their debt servicing costs are well managed and have continued to be since we upgraded them.”

Payment ability assessed
Moody’s increased the city’s rating last November to A2, which is described in the Moody's Rating System as “upper-medium grade” and “subject to low credit risk.”

Prior to that the city’s rating had been the medium-grade Baa1, subject to moderate credit risk "and as such may possess certain speculative characteristics," the system guide states.

A higher rating allows North Bay to borrow on the financial markets at lower interest rates, saving the city thousands of dollars in repayment costs, said Coun. Peter Chirico.


The Moody’s rating system assesses the ability and willingness of a bond or debenture issuer, such as North Bay, to make timely payments on that debt during its lifespan.

“One of the key things our rating reflects is our view of the risk that an entity is going to be unable or unwilling to make scheduled debt payments, and it also reflects the likelihood of and severity of a default, if one occurs,” Rubinoff said.

North Bay’s rating was formulated in part, Rubinoff said, on audited financial statements provided by the city.

“We also have a good look at the industrial base and where the property tax base is likely to go in the future. But we also visit the city, ask lots of questions, and also get information from other sources such as Statistics Canada and think tanks,” said Rubinoff, who spent a week here last September gathering data.
“We also analyze the operating budget, the size of debt, the structure of the debt servicing costs as well as looking at the quality of management.”

Rating could be upgraded
Moody’s rating of North Bay has also factored in future funding commitments including the water filtration plant and North Bay’s contribution to the new hospital, Rubinoff said.

North Bay’s rating could be upgraded again in the future, Rubinoff added, if the city continues to manage effectively, if its debt service costs relative to the size of the budget continues to decline and the assessment base grows larger.

“That could start to generate upward pressure on the credit rating,” Rubinoff said.

“And some increase in future support from upper levels of government could be a factor too, depending on how much of an impact that would have on the operating budget, the size of the debt, and the structure of debt servicing costs.”

On the cusp
Chirico said the Moody’s rating proves “that the planning process that I certainly worked on and championed back three years ago when I was elected has worked.”

“We have a plan we put in place, especially in infrastructure spending which I felt was lacking before,” Chirico said.

“Now we’re spending a half million extra a year on infrastructure and we’re going to keep adding to that fund, and by 2009 we’ll be spending $7.5 million each and every year on infrastructure where as right now we’re spending $900,000 to $1.2 million.”

Chirico said the city is on “the cusp” of some “great” growth.

“The foundation has been laid already and it’s ready to be taken advantage of.”

Chirico was also quick to point out council could not have done it without the help of senior staff, pointing specifically to treasurer Brian Rogers.

“Without a doubt,” Chirico said, “he’s an excellent manager of our taxpayers’ money.”