Horry credit boost could free up county cash

Horry County may spend fewer tax dollars to pay off its debts after a major credit rating agency upgraded the quality of the county's bonds, also giving high ratings to new bonds that will go on sale today. Ratings for Brunswick County, N.C., held steady.

Fitch Ratings gave $130 million of Horry County bonds a AA+ rating, up from AA. An additional $26.5 million in bonds that will go on sale today were rated AA+. The new bonds will be used to refinance a portion of the county's debt.

Existing Brunswick County bonds held at a AA- with $24.5 million in new bonds receiving the same rating. The county plans to sell its bonds June 8.

Horry County's high ratings may net a lower interest rate when its bonds go on sale, said Anne Wright, the county's chief financial officer. A lower interest rate would mean the county can spend less tax money to pay off debt and more on other priorities.

Fitch's investment-grade ratings range from a low of BBB to a high of AAA. A double-A rating is considered "very high credit quality," with pluses and minuses denoting smaller variations in quality. Higher ratings mean less risk for lenders, often equating to lower interest rates.

In today's sale, large underwriting companies can bid on the bonds, offering to loan the county money at a certain interest rate, Wright said.

For example, Morgan Stanley bought $62 million in bonds issued in 2007, she said.

Horry County aims to gain lower interest rates in the sale, otherwise it will not go through with the refinancing, Wright said.

"It's the same as refinancing your home mortgage - getting a new loan to pay off your old loan," Wright said.

Horry and Brunswick counties use municipal bonds to fund large construction projects. For example, Horry County used bonds to pay for remodeling the old court house. Brunswick County's bond issue next month will pay for water and sewage treatment facilities and to build water distribution lines for the fire department.

Horry County's finances remain strong, with little risk of it defaulting on its loans, according to a written report by Fitch.

"The ... bond upgrade reflects continuously strong financial performance in spite of the tourism-based economy which is inherently volatile and has weakened in recent years," Fitch said in a written statement. "The county continues to exhibit strong financial operations with a diverse mix of revenue streams, a relatively flexible expenditure environment and sizeable reserve levels."

Horry County will likely run a surplus this year while maintaining a moderate level of debt, the report said.

Although Brunswick County's ratings stayed the same, they had gone up from A+ to AA- on April 30 as part of a larger overhaul of the way the Fitch rates bonds, said Julie Miller, the county's deputy finance officer.

The county's water and sewage treatment system has maintained strong finances and pays its debt separately from the county, she said.

District 1 County Commissioner Phil Norris said he is pleased with the finances, which he said have improved during the past 10 years.

The county strives to keep ratings high and debts as low as possible, he said.

"Brunswick County has made significant strides in the past decade with expansion of our water and sewage systems and that takes capital," Norris said. "I'm very pleased with the way things have turned out especially in this economy."