A bond rating agency is raising a red flag for investors following Montgomery County's refusal to pay a bill to the Montgomery-Otsego-Schoharie Solid Waste Management Authority.
Standard & Poor's rating service announced today its ratings for Montgomery County debt and for MOSA's debt are being placed on "CreditWatch" with "negative implications as a result of disputed payments under the service agreement that secures MOSA's outstanding bonds."
In a resolution last week, Montgomery County supervisors agreed to pay only $69,621 of a $171,369 bill owed to the authority as part of the service agreement binding the three-county waste stream.
The county's refusal to pay its bill has implications for the county's credit rating, used to determine the rate the county has to pay when it borrows money. The same is true for MOSA's credit rating, which was elevated to an 'A-' at the end of 2007.
Standard & Poor's Analyst Robin Prunty said the agency places entities on its CreditWatch service as a warning to investors.
"It's an action on the bond issue," Prunty said. "It highlights to investors that there's some issues out there that could negatively affect the rating."
Montgomery County currently enjoys an 'A' long-term rating for its general obligation debt, according to Standard & Poor's.
"Obviously we're concerned with that rating because they have a long-term obligation to make a payment under the service agreement and they're opting not to do that," Prunty said. "That's just not viewed very positively from a credit standpoint."
Montgomery County Treasurer Shawn Bowerman was not available today for comment.