Standard and Poor's gives Wayne County credit rating a boost
Detroit — Standard and Poor's, a credit-rating agency, has given Wayne County an A rating, up from BBB+, Wayne County announced Friday.
"A credit rating is an informed opinion," advises the Standard and Poor's webpage explaining the rating scale.
"Credit ratings are forward-looking opinions about an issuer’s relative creditworthiness," the website explains. "They provide a common and transparent global language for investors to form a view on and compare the relative likelihood of whether an issuer may repay its debts on time and in full."
The scale runs from AAA ("Extremely strong capacity to meet financial commitments") to D on the low end (owing to "payment default on a financial commitment or breach of an imputed promise; also used when a bankruptcy petition has been filed).
Investment-grade ratings are BBB- and above.
Everything lower is considered speculative. An A rating indicates a "strong capacity to meet financial commitments, but somewhat susceptible to economic conditions and changes in circumstances," according to the rating scale.
The BBB rating signaled to investors that Wayne County had an "adequate capacity to meet financial commitments, but more subject to adverse economic conditions," according to the rating scale.
"The 'A' grade rating indicates stability of Wayne County’s ability to meet its long-term debt obligations, making the county more attractive to institutional bond investors," said Wayne County Executive Warren Evans, in a statement. "The rating increase means it will cost Wayne County less to finance long-term infrastructure and investment projects."
Evans added that "just six months ago, Moody's also upgraded Wayne County's rating to A3." Moody's is another top credit-rating agency.
Wayne County says that "the ratings the county currently enjoys are the highest since 2010," more than a decade ago.
Evans, who was elected in November 2014, noted that Michigan's largest county appeared then to be headed toward bankruptcy.
"When I first came to office, the common wisdom was that we could not possibly avoid going into bankruptcy," Evans said in the statement. "As it turns out, the common wisdom was wrong."
Evans' team says the county has "substantially" cut health care costs and long-term liabilities, increased its reserves, and is even building a new criminal justice complex.
Former county executive Robert Ficano's administration tried to build a jail in 2011, but was unable to complete it, halting construction in 2013. It stood half-built for years.
In 2018, under Evans the "fail jail," the two downtown jails, and Wayne County Circuit Court were all sold to Dan Gilbert's Bedrock, which has partnered with the county to build the new justice center off Interstate 75.