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Posted on: January 19, 2022

Fitch Ratings Upgrades Polk County Bond Ratings

Clerk Stacy Butterfield standing in front of 5 story Polk County administration building

Fitch Ratings recently upgraded two of Polk County’s bond ratings and its Issuer Default Rating (IDR) to ‘AA+’ from ‘AA’. The bonds include:

  • Outstanding public facilities revenue bonds, series 2014
  • Outstanding Utility System Revenue bonds, series 2012,2013,2014A, 2014C and 2020

“Bond ratings are important,” said Clerk Stacy Butterfield, Polk County Clerk of the Circuit Court & Comptroller. “Favorable ratings result in better interest rates and they help lower debt service payments. My office works in partnership with the Board of County Commissioners and these upgrades are a testament to the success of the Board’s strong financial management and policies.”

Public Facilities Revenue Bonds

As stated in a press release from Fitch Ratings: “The upgrade of the IDR and the public facilities revenue bonds ratings to 'AA+' from 'AA' reflects the county's rapidly growing tax base and population. Additionally, the IDR incorporates Polk County's very low long-term liability burden, a superior level of inherent budget flexibility, and highest gap closing capacity, leaving the county well positioned to manage through economic downturns. The PST [public service tax] bonds rating reflects a solid pace of revenue growth and the robust resilience of the security structure to revenue volatility.”

The company also stated, “The county has high independent legal revenue raising ability given current millage rates below the state's statutory limit. The county's pace of expenditure growth is expected to remain in line with to marginally above revenue growth. Overall expenditure flexibility is solid, given moderately low carrying costs of 9%-10% of total government spending and a generally flexible workforce environment.”

Why It Matters

The rating increase for the public facilities revenue bonds is a representation of the county’s growth,” Clerk Butterfield said. “It showcases that the county has a low debt burden, and strong budget flexibility due to low ad valorem tax rates, compared to the maximum that is allowed by Florida law. It is also a result of robust reserves maintained by the county.

Utility System Revenue Bond

According to Fitch Ratings, the upgrade of the Utility System Revenue Bond ratings to 'AA+' from 'AA' reflects the system's very strong financial profile, assessed at 'aa,' amid very strong revenue defensibility and low operating risk profiles. 

As stated by the company, “The strength of the system's revenue defensibility, assessed at 'aa', is rooted in the county's strong revenue-raising ability, supported by a growing, primarily residential customer base. The system's operating cost burden is assessed at 'a' and remains low despite recent operating expense increases. A moderate life cycle ratio is supported by adequate capital investment.”

Fitch Ratings also stated that very favorable demand characteristics are supported by strong customer growth, which is expected to provide ample revenue with no anticipated rate increases.

Why It Matters

“The rating increase for the utility revenue bonds showcases that the county has strong revenue compared to outstanding debt, customer growth, and ample capital investment,” Clerk Butterfield said.

View the Clerk’s annual publication, the Popular Annual Financial Report, to learn more about Polk County’s finances. This condensed report is produced each year for residents to provide a short, reader-friendly summary of how County resources are used. View the report under the Public Funds section.

The information shared in this release is extracted from the press releases distributed by Fitch Ratings.