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County of Essex Finance Department County of Essex Credit Rating Report - January 1998 Page 2 Firstly, the A rating signifies that County of Essex debentures are of a high quality, and conversely low risk. In the current municipal operating environment, an A rating is a significant achievement, particularly in the Province of Ontario. The rating provided by CBRS represents an independent testimony to the beneficial effects of the strengthening initiatives introduced and subscribed to by Council. A Positive rating outlook means that conditions exist, which if full realized, will strengthen .local economic conditions and further improve the municipality's ability to meet its debt obligations. In other words, economic conditions are, on balance relatively good, and are likely to improve. By extension, the more positive the rating the lower the risk, ultimately translating into lower borrowing costs. CBRS officials were impressed with the vitality and diversity developing in the local economy. At a time when many outlooks across the Province are being downgraded to Stable or even Negative, the County remains as only one of three municipalities in Ontario to retain the Positive rating. A more subtle benefit of a Positive rating is the economic interest generated by a uniquely positive rating outlook. Although quantification of the economic development activity a credit rating may generate is difficult, rating opinions are widely circulated in the private investment community. To have both the County of Essex and the City of Windsor receive a Positive outlook, speaks well.for the long term strength of the region. In light of the growth in the local economy and the County's improving financial position., under normal circumstances the County likely would have been subject to a. rating upgrade to A +, However, CBRS felt constrained by the uncertain environment created by the realignment of provincial - municipal responsibilities. As a result, CBRS is taking a wait - and-see approach to the County's ability to deal with and /or mitigate resultant impacts. Recommendation For the information of County Council, Respectfully mitted, Brian J. Gregg Treasurer January 21, 1998 Attachment Canadian Bond Rating Service - County of Essex January 7, 1998 a:Ln @fllo6rerepacE.janBBOnalrpt