HomeMy WebLinkAboutA009 - Letter from Evensen Dodge dated April 8, 2002 - ratingEVENSEN DODGE
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April 8, 2002
Mr. Duane Pitcher
Director of Finance
Ames City Hall
515 Clark Avenue
Ames, Iowa 50010
Dear Mr. Pitcher:
At your request we have had several recent discussions with officials from Standard and Poor's
Rating Agency regarding the City's upcoming General Obligation Bond issue. As you are aware,
the City currently holds an "Aaa" rating from Moody's Investors Service and desires attaining the
same rating from Standard and Poor's.
Standard and Poor's has indicated their measurements do not currently elevate the City's credit
rating to "AAA" status. While both rating agencies use some similar criteria, Standard and
Poor's has weighted the "wealth levels" of communities in a manner which impacts the City of
Ames. We indicated to Standard and Poor's officials that we found no compelling rationale to
continue their rating in the absence of a quantifiable likelihood for an upgrade in the near future.
The Standard and Poor's staff indicated a desire to remain involved with the City's rating and
suggested an alternative in which the City does not request a rating nor does Standard and Poor's
offer a rating on the new bond issue. It is my understanding that Standard and Poor's would
continue to "survey" the credit of the City to maintain the Outstanding rating and be in a position
to provide an upgrade when certain benchmarks are met. However, they would not continue to
review the City's credit in this mariner for an unlimited amount of time. This alternative does not
constitute a formal drop of the Standard & Poor's rating at this time.
We are of the opinion the City is best served by this suggested approach. It is also our belief that
having the new issue formally rated by Moody's Investors Service only will not negatively
impact the City's ability to receive quality bids on this issue, or future issues. Additionally, we
will initiate an internal review of the pertinent "wealth indicators" relating to the Ames
demographic and prepare a report for your review prior to the next bond issue.
Should you have any questions please contact me at your convenience.
Sincerely,
EVENSEN DODGE, INC.
David Dirks
Senior Vice President