KRUM — A financial analyst upgraded the long-term credit ratings for 16 Texas cities, including Krum, as part of the company’s continuing analysis of the creditworthiness of smaller cities.

Krum went up from BBB to A-minus.

Standard & Poor’s, a company that provides independent financial evaluations, published its analysis Nov. 4 and included other measures of financial health.

The city’s financial adviser, Joshua McLaughlin, presented copies of the report to the City Council.

Nine of the upgraded cities were in the Panhandle or the High Plains, three were in the Hill Country and two were in the Houston area. Lake Worth was the only other North Texas city upgraded, from BBB-plus to A.

Krum’s upgrade provides the city no immediate savings on bonds it has already sold, because those bonds were sold to investors at a fixed interest rate, McLaughlin said.

But the next time the city borrows, its interest costs will go down, he said, adding that the rating improvement was important in light of the nation’s credit crisis.

“If you came to me and wanted to borrow with the BBB rating, I would say that now is not the time,” McLaughlin said.

Standard & Poor’s issues bond ratings at 10 basic grades.

Grades of AAA, AA, A and BBB are given to borrowers with the strongest ability to repay. The firm gives grades of BB, B, CCC, CC and C for more speculative securities. Securities in payment default are rated D.

McLaughlin said Standard & Poor’s first placed Krum on the investment grade list in 2004, with a BBB-minus rating. By the following year, when the city issued $1.535 million in certificates of obligation, the rating had increased to BBB.

Those bonds were rated A-minus on Wednesday.

The researchers who prepared the report noted that Krum has a “moderately high” debt burden of 9.2 percent of its assessed values for 2009.

At 23.7 percent of its operating expenses, the city’s debt service carrying charges were the highest among the 16 cities evaluated.

The city has no immediate plans to issue any more bonds, according to Mayor Terri Wilson.

In the report, the researchers labeled financial management in Krum and nine of the other cities as “standard,” noting that city leaders had recently implemented several financial management policies. Six other cities in the report were labeled “good.”

Later in the meeting, the council continued to deliberate another set of policies important to the city’s rating. Council member Stephanie Thompson, who is an accountant, asked for another few weeks to review the policies that govern reserves, capital improvement plans, and revenue and expenditure assumptions during the budget process. She wanted to see what other cities did, she said.

No one on the council immediately reacted to the report, but Wilson said she was pleased that it showed the city was going in the right direction.

PEGGY HEINKEL-WOLFE can be reached at 940-566-6881. Her e-mail address is pheinkel-wolfe@dentonrc.com.

S&P ratings

Standard & Poor’s upgraded Krum’s creditworthiness from BBB to A-minus. S&P regularly provides independent financial reviews of area cities for investors. Below are the most recent ratings for the outstanding debt of area cities.

City      Year            Type            Amount            Rating

Argyle  2003            CO            $0.9 million   A

Argyle  2003            GO            $1.27 million   A

Aubrey 2003            CO            $1.74 million   BBB

Aubrey 2007            CO            $1.915 million   BBB+

Corinth 1997            GO            $8.245 million   AA

Corinth 1998            CO            $0.8 million   A+

Corinth 1999            GO            $7 million   A

Corinth 2001            GO            $2 million   AA

Corinth 2005            GO            $5.08 million   A+

Corinth 2007            CO            $23.63 million   AA

Corinth 2007            GO            $5.33 million   A+

Corinth 2008            CO            $6.65 million   AA

Hickory Creek            2007            GO            $5 million   A-

Krum   2005            CO            $1.535 million   A-

Krum   2004            GO            $3.969 million   A

Krum   2000            CO            $1.6 million   BBB+

Lake Dallas            1998            GO            $2 million   AAA

Lake Dallas            2001            CO            $.75 million   AAA

Oak Point            1998            GO            $1.98 million   AAA

Pilot Point            1996            CO            $1.4 million   AA

Key

-- GO is a general obligation bond, authorized by a vote of the electorate.

-- CO is a certificate of obligation bond, authorized by a city or town council vote.

-- Standard & Poor’s basic investment grades, in order from high to low, are AAA, AA, A and BBB.