A strong county bond rating and the weak stock market enabled Montgomery County to  sell its road bonds at a significant premium - saving money even beyond the interest costs earlier announced, said Montgomery County Judge Craig Doyal.

Last week, Judge Doyal announced that by refinancing its existing debt the county was able to save taxpayers $9.76 million over the life of the existing bonds; as for the new road bonds being sold, the county sold them at a lower rate than originally anticipated, reducing the interest costs by $17 million from the initial estimate.

But it turns out the recent decline in stocks - coupled with the county's bond ratings - made the county's bonds so attractive to buyers that investors paid the county a premium to purchase them. For example:

Both  Standard & Poors and  Moody's earlier this month awarded Montgomery County one of the highest-possible credit ratings; t he ratings were based in part on the county's "conservative" budget and fiscal practices, according to statements by both ratings agencies. The ratings agencies also noted the county's strong economy and positive economic forces that should help the county continue its strong population growth and expansion of its tax base.

Standard & Poor's Ratings Services assigned its 'AA+' long-term rating to Montgomery County, while Moody's Texas' assigned the county a rating of Aa1; both ratings are the 2nd highest among 19 possible ratings. It means the county's rating is either equal to or superior to ratings for counties comparable in size in the Harris County region, such as Fort Bend, Brazoria and Galveston.

 "It is important for Montgomery County to take every possible opportunity to save taxpayer dollars on this road bond and our existing debt, and we were able to do so by having a strong credit rating when we went to market on these bonds," said County Judge Craig Doyal.

"This is in keeping with our pledge to conservatively manage this road bond project and our debt to be accountable to our taxpayers and protect their interests, keeping costs as low as possible."

 

In addition to the refinancing, by selling road bonds now rather than having attempted to go to market in December, the county was able to take advantage of the movement in the stock and bond markets, saving additional money for taxpayers.

At a recent Commissioners Court meeting, John Robuck, the county's financial adviser with BOSC, Inc., told the county that the decline in the stock market has prompted a "flight to quality" for investors, driving them to more stable investments such as government bonds.