Hockey has its hat trick. Basketball has a triple double. Baltimore County just hit a triple-triple. Howard County has too. And it means millions of dollars in savings for taxpayers.
Both counties have Triple A bond ratings from three different agencies: Standard and Poor’s, Fitch and Moody’s. Baltimore County Executive KevinKamenetzsays only 38 counties nationwide have it.
“It’s basically a credit score,”Kamenetzsays. “So Baltimore County has the highest credit score possible.”
If a city or county has an excellent bond rating it can borrow money at a lower interest rate. And when you are borrowing hundreds of millions of dollars at a time, you’re talking about real money.
For instance, back in June the county says it refinanced 60 million dollars in bonds and was able to save 7 million dollars by lowering its interest rate. That’s enough to pave 37 miles of road or buy 67 school buses.
If you think about it, it’s kind of like borrowing money to buy a home. If you have an excellent credit score, you’re a slam dunk to get the loan at a good interest rate, says Mike Fagan withPHHHome Loans.
“Those are the ones who are going to get the best terms; the best options,” he says. “The vast number of programs that are available they can pick and choose from any of them without any barriers or restrictions and ultimately the best price.”
So you spend less money on the house, and you have more cash for other things.
The rating agencies say they gave Baltimore County such a high rating because it’s well managed and has a diverse economy.
JohnMoodycame up with bond ratings in 1909. At the time the bond market was exploding nationally to finance the railroad industry. Moody gave investors a book with ratings that analyzed a railroad’s operations. In 1914 he expanded his system to include municipal bonds.
Baltimore and Howard Counties aren’t the only governments around here with a great credit score. The state also has the triple triple. Other localities, like Carroll and Anne Arundel, have at least one triple A score. Kevin Lynch is the head of research for M&T Securities. He says that speaks well for the whole area.
“It says it’s a very dynamic economically growing region with high wealth and income indicators,” Lynch says, “and that management has maintained stable financial operations over a period of time.”
Now if you live in Baltimore County, and you vote, you play a role in all of this. Back in November, voters gave the county the green light to borrow more than 275 million dollars to pay for all kinds of things, from school construction to rural land preservation. They were those questions on the ballot that may have taken you by surprise because you were focused on the governor’s race. All nine bond referendums passed. So earlier this month the county sold 200 million dollars in bonds at a three percent interest rate.
Investing in bonds sold by Baltimore County is a pretty safe bet. But Lynch says municipal bonds in general are a safe harbor for investors.
“You haven’t had wholesale defaults since the Civil War where you had states actually defaulting on their debts,” Lynch says. “So if you can look at it in those terms, yeah it’s relatively safe.”
However, it does happen. One word. Detroit.
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