Chesterfield Township receives bond rating upgrade – The Voice

Chesterfield Township’s municipal offices are located on Sugarbush Road. (Katelyn Larese – MediaNews Group)

Fitch Ratings upgraded Chesterfield Township’s general obligation bonds and issuer default ratings to AA+ from AA-.

The upgrade is the result of Fitch’s application of the new US Public Finance Local Government Rating Criteria. According to the rating agency, the rating reflects the municipality’s strong long-term debt burden, including a very low debt burden to personal income ratio – 95th percentile of the portfolio rated by Fitch -, weak population growth, and medium-level demographic and economic metrics.
“This reinforces the township’s strong financial position and validates the sound practices in our daily operations,” Chesterfield Township Supervisor Brad Kersten said in a press release.

“Congratulations to all our employees who made this possible,” he added.

Fitch is the second agency to upgrade the municipality’s rating since S&P Global Ratings raised the municipality’s rating from AA- to AA/Stable last year.

“Having our status elevated by a second well-known and respected financial rating company is further confirmation that we are achieving financial success across a broad spectrum of specifications,” said Kersten.

Fitch said the rating also takes into account the municipality’s “aaa” financial resilience rating, which assumes maintaining unrestricted general budget reserves equal to at least 25% of total general budget expenditures, given limited budget flexibility. The agency said the municipality’s financial resilience is determined by the combination of its “low” revenue control and its “medium” expenditure control, resulting in a “limited” budget flexibility rating.

Fitch noted that the following factors, individually or collectively, could impact the rating upgrade:

• A reduction in long-term liabilities of about 30%, assuming current levels of personal income and government revenues and expenditures.

• An improvement in demographic and economic indicators, in particular population growth, educational levels and unemployment rates in the region.

The agency identified the following factors that could lead to a downgrade of the rating:

• A sustained decline in available reserves in the general fund to below 25% of expenses and withdrawals, which would lower Fitch’s financial resilience rating to below ‘aaa’.

• An increase in long-term liabilities of about 60%, assuming current levels of personal income and government revenues and expenditures.

Chesterfield Township is currently in the early stages of the budget process for fiscal year 2025.

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