Russellville’s municipal bonds on $3.3 million borrowed in 1998 for a new sewer plant are not as “safe” as they once were according to Moody’s, an investors service which performs financial research and analysis on commercial and government entities. The company ranks the credit-worthiness of borrowers using a standardized ratings scale.

The city of Russellville decided to refinance these bonds to lower a five-percent interest rate, which worked both in its favor and against.

Although the interest rate was lowered to 2.92 percent it could have been even lower if the city had not fallen from a Aa3 rating to a Baa2 rating. The city also had to take out a one time $15,000 insurance policy that will make investors feel more secure about the bonds.

The total amount lost due to the rating drop could result to $100,000, said Mayor Gene Zick.

One of the main reasons for the drop in rating said Zick was the condition of the water and sewer debt verses revenues. “They asked some questions about the water and sewer debt and also wanted to know if we had experienced a water rate increase recently,” said Zick adding, “I told them we had received a 13 percent increase from Logan Todd Regional Water Commission in March. They then asked if we passed on any of the increase and I had to tell them we hadn’t.”

Moody judges obligations rated Aa (Aa1, Aa2, Aa3) to be high quality, with "very low credit risk" but "their susceptibility to long-term risks appears somewhat greater".

Moody judges obligations rated Baa (Baa1, Baa2, Baa3) to be "moderate credit risk". They are considered medium-grade and as such "protective elements may be lacking or may be characteristically unreliable".