Medway Boasts of AAA Bond Rating

Excerpts from the recent Standard  & Poors report on Medway:

Overview

• S&P Global Ratings assigned its 'AAA' rating to Medway, Mass.' approximately $5.4 million

series 2025 general obligation (GO) municipal-purpose loan bonds.

• At the same time, we affirmed our 'AAA' rating on the town's GO debt outstanding.

• The outlook is stable.

• The rating reflects the application of our “Methodology For Rating U.S. Governments,” Sept. 9,

2024.

Rationale

Security

Medway's full-faith-and-credit GO pledge, subject to Proposition 2-1/2 limitations, secures the

bonds. Despite commonwealth levy limit laws, we do not make a rating distinction between

Medway's limited-tax bonds and its general creditworthiness because our analysis of its financial

and economic conditions already includes the statutory limitation imposed on its revenue-raising

ability.

The 2025 GO bond proceeds will finance various capital improvements.

Credit highlights

The 'AAA' rating reflects Medway's robust economy and financial performance, with a

demonstrated track record of maintaining reserves that exceed the medians of comparably rated

state peers. Medway's highly affluent tax base and forward-looking financial-management

practices and policies, which we believe will likely allow the town to produce positive operations

even as broader economic pressure persists, support general creditworthiness.

The town continued its trend audited surpluses in 2024, reflecting strong revenue and

expenditure performance relative to budget estimates and continuing its historical track record

of positive operations. We note that its fiscal 2024 operating result of 0.4% of general fund

Primary Contacts

Rahul Chakraborty

New York

2124381864

Rahul.Chakraborty

@spglobal.com

Timothy W Barrett

Washington DC

1-202-383-2232

timothy.barrett

@spglobal.com

www.spglobal.com/ratingsdirect August 27, 2025 1

revenues is lower than its three-year average operating result of 3.3% due to elevated transfers

to its capital projects fund for one-time grant-related capital expenses. The town typically has

positive year-to-year variances in health benefit costs, debt service, and local receipts due to

conservative budgetary assumptions.

For fiscal 2025, we anticipate that the town will have another surplus, with positive budgetary

variances in both revenue and expenditures. From fiscal 2026 on, the town expects to realize

approximately $2.2 million in additional revenue annually due to a new payment-in-leu-of-taxes

(PILOT) agreement with a battery storage facility and could see additional PILOT revenue in future

fiscal years from additional storage facilities, a development we view as credit positive. While its

debt profile is manageable, we recognize that the town’s pension and other postemployment

benefit (OPEB) liabilities will continue to pose long-term credit pressures, given the size of the

liabilities and low OPEB funded ratios.

Additional factors supporting the rating include the town's:

• Growing, primarily residential taxing base. Residents have access to employment in the

Boston-Cambridge-Newton metropolitan area, with higher-than-average economic output at

the county level that is projected to grow more slowly than national levels. Economic metrics

are in line with 'AAA' rated peers.

• Consistent trend of positive financial performance. The general fund budget is primarily

financed by local property taxes (75%). Year-to-date results for fiscal 2025 remain solid, and

the town anticipates that operating results will be in line with previous years’ surpluses, with

no major transfers for capital expected. The fiscal 2026 budget includes cautious budgetary

assumptions and exhibits the stable operating environment of the town.

• Robust reserves of around 37% of general fund revenue, providing ample cushion to absorb

disruptions associated with changes to state aid or unplanned expenditures resulting from a

slowing economy. The town does not anticipate spending these balances down within the

outlook period.

• Proactive management team that is focused on long-term planning and forecasting to ensure

operations remain stable in the face of growth. Conservative budget assumptions, along with

five years of historical trend analysis, inform annual budgets. The town's comprehensive fiveyear financial forecast and five-year capital improvement plan demonstrate its focus on longterm decisions. In addition, it has formal policies guiding debt, investments, and reserves.

Management also continues to take steps to insulate itself from cyber security risks.

• The town plans to issue $8 million for various improvements over the next two years, most

notably involving design and site preparations for an upcoming municipal building project. Over

the longer term, it has identified the need for renovations and additions to its town hall and

police station. The town has manageable debt service carrying charges and mid-range direct

debt per capita, although comparatively more favorable when measured against revenue. We

highlight the town’s large pension and OPEB obligation, which will continue to push up future

costs, although we note that the town has been proactive in funding the liabilities.

• Massachusetts municipalities have a predictable operating framework, with some statutory

flexibility to raise local-source revenue for operations, despite commonwealth limits on

property tax levy growth. For more information on our assessment of Massachusetts

municipalities, see "Institutional Framework Assessment: Massachusetts Local Governments,"

Sept. 9, 2024.

www.spglobal.com/ratingsdirect August 27, 2025 2

Medway, MA Series 2025 GO Municipal Purpose Loan Bonds Assigned ‘AAA’ Rating

Environmental, social, and governance

We analyzed the town's environmental, social, and governance risks relative to its economy,

management, financial measures, and debt-and-liability profile and determined that all are

neutral in our analysis.

Rating above the sovereign

Medway's GO bonds are eligible to be rated above the sovereign because we believe the town can

maintain better credit characteristics than the U.S. in a stress scenario. Under our criteria

"Ratings Above The Sovereign--Corporate And Government Ratings: Methodology And

Assumptions," Nov. 19, 2013, on RatingsDirect, Medway has a predominantly locally derived

revenue source, with property taxes accounting for roughly 75% of general fund revenues. It also

has independent taxing authority and independent treasury management from the federal

government.

Outlook

The stable outlook reflects our view that the town will maintain a stable financial profile,

supported by its very strong financial management policies. We do not expect to revise the rating

during the two-year outlook period