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News Release

Fitch Ratings Upgrades Bond Rating for the Town of Hilton Head Island

Release Date: November 5, 2019

Contact Information:
Carolyn Grant email icon , Communications Director, 843-341-4618

Hilton Head Island, SC – Fitch Ratings (Fitch) has raised its bond rating for the Town of Hilton Head Island's special obligation revenue hospitality fee bonds from an AA to AA+.

The higher rating resulted from Fitch’s recent review for the issuance of the series 2019 hospitality fee bonds. Fitch also upgraded the rating on the Town's series 2011A and 2011B special obligation hospitality fee bonds from AA to AA+ and affirmed the Town’s general obligation bonds at AA+.    

As part of this most recent review, Moody’s (Aa+/Stable) and Standard & Poor’s (AA/Stable) also reaffirmed their ratings for the Town’s hospitality fee bonds.  Earlier this year, all three national bond rating firms affirmed the Town’s general obligation bond ratings. They are:

  • Moody's                      Aaa/Stable Outlook
  • Standard & Poor’s      AA+/Stable Outlook
  • Fitch Ratings               AA+/Stable Outlook

The hospitality fee bonds are being issued to refund Series 2011A and Series 2011B hospitality fee bonds in order to take advantage of favorable market interest rates and generate savings for the Town. The original bonds were used to finance the Town’s contribution for a sewer expansion project and other capital improvements.

"This is very good news. We are very pleased with the upgrade from Fitch Ratings and the reconfirmation from the other agencies. This is another affirmation from independent rating agencies' examination of the Town's operations and finances since Hurricane Matthew, and the Town's response to the hurricane," said Stephen G. Riley, Town Manager.

"After the operational and financial difficulties caused by Hurricane Matthew three years ago, Town Council responded strongly to help restore the Island and its reserves. This also affirms that the steps Council took, including raising reserves and preserving additional debt capacity for future emergencies, contributed to a favorable rating for the Town," Riley said.

In its report, Fitch cited a number of factors supporting the Town’s strong rating, including:

  • The growth in pledged revenues from the hospitality fee and the Town’s exceptional financial profile.
  • Management’s prudent debt and reserve policies including increasing its reserve policy this year and reserves held outside the General Fund.
  • Management’s notable experience and ability to rebound from storms.
  • Strong financial practices and budgetary policies including the Town’s first adoption of a biennial budget for fiscal 2020 and 2021.

Moody’s and Standard & Poor’s were similarly complimentary regarding the Town’s financial practices and policies.

Rating agencies often cite factors in their ratings such as the Town's strong financial position, supported by comprehensive fiscal policies, diversified revenues, ample financial reserves, history of operating stability and a low direct debt burden coupled with debt capacity saved for future emergencies. The rating takes into consideration the Town's importance as an established tourism destination and its large tax base.

For more information on the Town’s fiscal operations, visit www.hiltonheadislandsc.gov.