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Nashua Earns Very Favorable Financial Grading From Standard And Poor’s Aug 2021

Nashua Earns Very Favorable Financial Grading from Standard and Poor’s Aug 2021


Standard and Poor’s Review of Nashua’s Financial Health

Nashua, New Hampshire; General Obligation

Credit Profile

US$69.91 mil GO bnds ser 2021 due 09/01/2046
Long Term Rating AAA/Stable New
Nashua GO
Long Term Rating AAA/Stable Affirmed
Nashua GO bnds (federally taxable) ser 2020 due 12/01/2045
Long Term Rating AAA/Stable Affirmed

Rating Action

S&P Global Ratings assigned its ‘AAA’ long-term rating to Nashua, N.H.’s series 2021 general obligation (GO) bonds
and affirmed its ‘AAA’ long-term rating on the city’s existing GO debt. The outlook is stable.
The city’s full-faith-and-credit pledge secures the bonds. Officials intend to use series 2021 bond proceeds to fund
various capital improvement and construction projects.

Under our criteria, titled “Ratings Above The Sovereign: Corporate And Government Ratings—Methodology And
Assumptions” (published Nov. 19, 2013, on RatingsDirect), we rate Nashua higher than the sovereign because we think
the city can maintain better credit characteristics than the nation in a stress scenario based on its predominantly
locally derived revenue base and our view that pledged revenue supporting bond debt service is at limited risk of
negative sovereign intervention. In 2019, local property taxes generated 75% of revenue, which demonstrated a lack of
dependence on central government revenue.

Credit overview

The city has a history of outperforming its budget due to conservative budgetary assumptions and careful in-year
monitoring. This has led to the maintenance of very strong available reserves, in particular since 2015. Additionally,
we view the city’s low reliance on state aid, along with its high reliance on local property taxes, as positive factors that
lead to rating stability. The city expects fiscal 2021 year end results to have outperformed the budget in the positive by
approximately $6 million. Its 2022 budget, totaling $291 million had no material changes from previous budgets and
we expect the city to maintain continued financial flexibility over at least the medium term. Over the longer term,
pension and benefit costs could pressure the budget, although we do not believe they pose an immediate budgetary
pressure. We do not expect to change the rating within the outlook period.

The long-term rating also reflects our view of the city’s:

• Very strong economy, with access to a broad and diverse metropolitan statistical area (MSA);
• Very strong management, with strong financial policies and practices under our Financial Management Assessment
(FMA) methodology;

  • Strong budgetary performance, with a slight operating surplus in the general fund and an operating surplus at the total governmental fund level in fiscal 2020;
  • Very strong budgetary flexibility, with an available fund balance in fiscal 2020 of 22% of operating expenditures;
  • Very strong liquidity, with total government available cash at 60.7% of total governmental fund expenditures and 7.9x governmental debt service, and access to external liquidity we consider strong;
  • Strong debt and contingent liability profile, with debt service carrying charges at 7.7% of expenditures and net direct debt that is 40.9% of total governmental fund revenue, as well as low overall net debt at less than 3% of market value, but a large pension and other postemployment benefit (OPEB) obligation; and
  • Very strong institutional framework score.



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