Mount Pleasant Officials Optimistic About Regaining Previous Credit Rating After Moody’s Downgrade

Late last month, the credit rating agency Moody’s downgraded the Village of Mount Pleasant’s credit rating, bumping the village from an Aa2 to an Aa3 rating with a negative outlook because of heavy borrowing to secure Foxconn Technology Group’s planned manufacturing facility.

The bump reinforces the idea that there’s uncertainty in the Foxconn deal, says Kevin Rich, a Marquette University accounting professor.

“It’s simply a reflection of the fact that it’s not a guarantee that everything related to Foxconn is going to work out the way that it’s being projected,” he said.

Foxconn has promised to bring at least 13,000 jobs and invest $10 billion in the state.

In the downgrade announcement, Moody’s said the bump takes into account additional risks associated with the project. It cited questions surrounding “guarantee provisions” put in place in the chance Foxconn doesn’t follow through with its obligations.

But Moody’s said concerns about high debt are somewhat offset by the village’s growing tax base and above-average socioeconomic characteristics.

Still, the Democratic Party of Wisconsin has been critical of the downgrade.

“This downgrade is just more evidence that the Foxconn deal is on shaky ground and Wisconsinites are dealing with the consequences,” said Alex Japko, a party spokesman.

But Rich said the revenue Foxconn is projected to bring still seems likely to him and he suspects that’s why the village was only downgraded one notch.

Mount Pleasant Village Administrator Maureen Murphy said the village just borrowed $126 million for Foxconn-related projects and there are no plans to borrow additional funds anytime soon.

Bonds with an Aa rating are considered to have very strong creditworthiness. But a lower credit rating could increase the cost of borrowing for any local government. Rich said future borrowing for things like infrastructure could be affected by a lower bond rating.

Mount Pleasant officials expected the downgrade, said Murphy, because of a similar downgrade the agency gave Racine County — also because of heavy borrowing — last November.

There will be another Moody’s review in six months, Murphy said, and Foxconn’s early construction on the future manufacturing campus will prove that the project is on pace to meet expected returns.

“I anticipate an increase in Aa2 standards for the village,” she said.