The Borough of Collingswood recently received a credit rating upgrade from Fitch Ratings, one of the foremost nationally recognized statistical rating organizations in the US. Fitch has upgraded Collingswood, NJ’s Issuer Default Rating (IDR) and outstanding rated GO bonds to ‘AA’ from ‘AA-', rating their outlook as Stable.
An ‘AA’ rating denotes very high credit quality and expectations of very low default risk. This rating indicates that the Borough of Collingswood has a very strong capacity for payment of financial commitments, and it shows that their ability to make those payments is not significantly vulnerable to foreseeable events.
Fitch determined that the upgrade of Collingswood’s IDR and GO bond rating to ‘AA’ from ‘AA-' shows “sustained reductions in the Borough’s long-term liability burden coupled with enhanced resilience given the consistent maintenance of healthy reserve levels.” They continue, “the rating also reflects the Borough’s substantial independent revenue raising authority balanced against slow revenue growth prospects and an adequate ability to adjust key spending items.”
“This credit rating upgrade highlights the success of both the short-term and long-term fiscal plans that we as a Borough have implemented,” commented longtime Collingswood Mayor Jim Maley. “I think it speaks to all of the hard work that goes on behind the scenes, and to what we can accomplish when our local government is operating at a high level.”
There were a number of key rating drivers that led to Fitch issuing this credit upgrade, including the Borough’s revenue and expenditure frameworks and its operating performance, which has been shown to maintain healthy reserve levels, supporting a high level of basic financial flexibility through economic cycles given the stable nature of its revenue base and control over spending items.
The ratings organization explained that they “expect that Collingswood remains well-positioned to manage any challenges associated with future moderate economic downturns while maintaining a high level of fundamental financial flexibility.” Fitch goes on to state that “at times of economic recovery, the Borough generally takes actions to restore reserves. The Borough has experienced relatively steady growth in revenues largely driven by its ability and willingness to adjust its tax rate to maintain an adequate tax levy to support operations.”
Additionally, Collingswood’s low long-term liability burden helped the Borough see this uptick in their credit rating. Fitch expects levels to remain low, considering manageable debt plans and improvement in net pension liabilities associated with the state pension plans in which the Borough participates.
Collingswood Borough has a population of approximately 14,000 and is located in Camden County, NJ, about seven miles east of Philadelphia. Its vibrant downtown, award-winning restaurants, year-round events and festivals, and eclectic art scene have made it a premier destination in South Jersey.