Canton, Massachusetts · Saved source text
AAA Bond Rating July 2025
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Research Update:
Canton, MA Series 2025 GO Bonds Assigned 'AAA'
Rating; BAN Assigned 'SP-1+' Short-Term Rating
July 17, 2025
Primary contact
Overview
Melissa Stoloff
• S&P Global Ratings assigned its 'AAA' rating to the town of Canton, Mass.' $5.55 million series Boston
1-617-530-8030
2025 general obligation (GO) bonds.
melissa.stoloff
• We also assigned our ‘SP-1+’ short-term rating to the town’s $35 million bond anticipation @spglobal.com
note (BAN), maturing Aug. 13, 2026.
Secondary contact
• At the same time, we affirmed our 'AAA' rating on the town's existing GO debt.
Michael Ryter
• The outlook is stable. Chicago
1-312-233-7016
• The long-term rating reflects the application of our “Methodology For Rating U.S. michael.ryter
Governments” criteria, Sept 9, 2024. @spglobal.com
Rationale
Security
Canton's full-faith-and-credit pledge, subject to Proposition 2 1/2 limitations, secures the bonds
and notes. The town voted to exclude debt service on the notes from property tax limitations.
We rate the limited-tax GO debt on par with Canton's general creditworthiness because the ad
valorem tax is not derived from a measurably narrower property tax base and there are no
resource fungibility limitations, supporting our view of its overall ability and willingness to pay
debt service.
The short-term rating reflects Canton’s high investment-grade long-term rating and low market-
risk profile. In our view, and pursuant to our BAN criteria, we have assessed the town's market
risk as low due to the town's strong market access, information availability, and takeout
authorization.
Series 2025 bond proceeds provide financing for various capital needs, including the Paul
Revere Museum. The BANs provide initial financing for the Galvin Middle School construction
project. The project was approved by voters in a December 2024 referendum for a total project
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Canton, MA Series 2025 GO Bonds Assigned 'AAA' Rating; BAN Assigned 'SP-1+' Short-Term Rating authorization of $241 million; the town expects to receive significant reimbursement for eligible project costs from the Massachusetts School Building Authority, bringing its local share to $167 million. The project authorization and associated debt service exemption from Proposition 2 ½ revenue limitations passed with 74% voter approval, indicating strong community support for the project. Credit highlights The ‘AAA’ rating reflects Canton’s stable credit profile, demonstrated by tax base expansion and proactive management that supports positive financial results and healthy reserve levels in line with state peers. The town’s local incomes are at the higher end of the range for Norfolk County communities and are projected to remain above 150% of national levels, providing further credit uplift. While the town’s current debt-and-liabilities profile is manageable, we will continue monitoring planned additional debt’s impact on financial performance and the town's ability to balance escalating debt service costs, pension assessments, and general budgetary growth. Canton will have $94 million in total debt after this issuance, resulting in very low debt service costs (around 3% of revenue) and moderate debt per capita metrics. Construction on the new middle school is slated for completion by fall 2028; this note represents the first financing tranche, as officials expect to issue an additional $134 million over the next three years, with permanent financing expected in fiscal 2030. We project the town’s per capita debt metric will rise to about $8,000 once its full share is issued, which would be much higher than medians for similarly rated state peers; nevertheless, we anticipate other debt metrics (such as debt to total market value and total government funds budget) will remain moderate, supporting our holistic view of the town’s willingness and ability to support its debt obligations. The town’s balance sheet has historically been a credit strength; however, given the size of the new debt issuance we believe Canton has limited cushion to absorb unexpected adverse developments at the current rating level. In addition to the bonds, town officials anticipate financing the middle school project using projected pension assessment savings and funds set aside into a capital stabilization account to cover some of the debt service costs, as well as by maintaining unused levy capacity flexibility until 2030, when they plan to increase the tax levy closer to the maximum allowable. While the town’s debt metrics will weaken following the full issuance, we believe management’s forward-looking planning and the town's robust level of reserves somewhat offset this weakening and mitigate downward rating pressure for now. The rating continues to be supported by a stable property tax base that is experiencing ongoing growth; consistent financial performance demonstrated by ten consecutive years of general fund surpluses; and maintenance of reserves above 20% of revenue, which will likely continue over upcoming budget cycles as officials plans to continue adding to fund balance. The 'AAA' rating further reflects our opinion of the town's: • Growing tax base and participation in the greater Boston regional economy, which contributes to above-average household incomes. Canton is a residential suburb in Norfolk County, and the county’s economic output and per capita incomes are higher than those of national averages. Canton’s local incomes are on par with both the county’s average and similarly rated state peers. • Forward-looking financial planning, highlighted by formal five-year budget forecasting and capital planning and conservative assumptions that support annual budgets. While the town does not have a formal debt management policy, officials have demonstrated a level of www.spglobal.com/ratingsdirect July 17, 2025 2
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Canton, MA Series 2025 GO Bonds Assigned 'AAA' Rating; BAN Assigned 'SP-1+' Short-Term Rating forward-looking planning on debt with this current school project. The town has measures in place to mitigate cyber security exposure. • Robust financial performance supported by a primarily property-tax-funded budget (73% in fiscal year 2024); we anticipate near-term budgets will remain balanced but will monitor longer-term performance and the town's ability to adjust the budget to accommodate expected debt service costs escalations, increasing pension contributions, and general budget growth. • Maintenance of healthy reserve levels around 24% of revenue, above the informal fund balance target minimum of 15% of expenditures. Canton will likely continue adding to its capital stabilization account, reported as unassigned fund balance, to help offset debt service costs, but we anticipate reserve levels will remain stable in the near term. • Manageable debt service costs and per capita metrics that are currently in line with peers'. The middle school is the town’s largest project, although Canton will likely continue issuing bonds for its annual capital program. • Canton's sizeable pension and other postemployment benefit obligation totaling $131 million as of fiscal 2024 year-end remains a credit weakness given our expectation that costs will escalate as the pension system works toward full funding by 2034, delayed by roughly five years based on new assumptions. • 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. Environmental, social, and governance We assessed Canton's environmental, social, and governance factors relative to its economy, management, financial measures, and debt-and-liability profile and found them neutral in our credit rating analysis. Rating above the sovereign We rate Canton higher than the nation under our criteria "Ratings Above The Sovereign-- Corporate And Government Ratings: Methodology And Assumptions" (Nov. 19, 2013) because we believe the town can maintain better credit characteristics than the nation in a stress scenario based on its predominantly locally derived revenue base and our view that pledged revenue supporting bond debt service is at limited risk of negative sovereign intervention. Outlook The stable outlook reflects our view of Canton's positive financial performance and healthy reserve levels, and is further supported by its comprehensive long-term planning and robust property tax base despite expected debt profile weakening from the school project. Downside scenario We could lower the rating if finances were to come under pressure and deteriorate, whether due to unanticipated circumstances or increasing retirement contributions, leading to a material draw on reserves. We could also lower the rating if additional debt beyond www.spglobal.com/ratingsdirect July 17, 2025 3
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Canton, MA Series 2025 GO Bonds Assigned 'AAA' Rating; BAN Assigned 'SP-1+' Short-Term Rating
expectations substantially weakens the town’s debt profile, such that metrics are no longer
comparable with peers' and are not fully offset by other credit strengths.
Canton, Massachusetts--Credit summary
Institutional framework (IF) 2
Individual credit profile (ICP) 1.83
Economy 1.0
Financial performance 2
Reserves and liquidity 1
Management 1.65
Debt and liabilities 3.50
Canton, Massachusetts--Key credit metrics
Most recent 2024 2023 2022
Economy
Real GCP per capita % of U.S. -- -- 119 121
County PCPI % of U.S. -- -- 165 165
Market value ($000s) -- 7,608,654 6,892,909 6,124,774
Market value per capita ($) -- 309,736 280,599 252,100
Top 10 taxpayers % of taxable value -- 9.0 10.1 9.0
County unemployment rate (%) -- 3.7 3.1 3.2
Local median household EBI % of U.S. -- -- 149 149
Local per capita EBI % of U.S. -- -- 160 163
Local population -- -- 24,565 24,295
Financial performance
Operating fund revenues ($000s) -- 130,108 123,527 114,212
Operating fund expenditures ($000s) -- 126,429 119,826 112,175
Net transfers and other adjustments ($000s) -- (2,535) -- --
Operating result ($000s) -- 1,144 3,701 2,037
Operating result % of revenues -- 0.9 3.0 1.8
Operating result three-year average % -- 1.9 3.2 2.8
Reserves and liquidity
Available reserves % of operating revenues -- 24.3 24.1 23.2
Available reserves ($000s) -- 31,610 29,769 26,469
Debt and liabilities
Debt service cost % of revenues -- 3.3 3.6 3.8
Net direct debt per capita ($) 3,638 2,244 2,296 2,139
Net direct debt ($000s) 89,357 55,134 56,400 51,964
Direct debt 10-year amortization (%) 71 74 -- --
Pension and OPEB cost % of revenues -- 8.0 9.0 9.0
NPLs per capita ($) -- 1,775 1,775 1,144
Combined NPLs ($000s) -- 43,603 43,603 27,788
Financial data may reflect analytical adjustments and are sourced from issuer audit reports or other annual disclosures. Economic data is generally sourced from
S&P Global Market Intelligence, the Bureau of Labor Statistics, Claritas, and issuer audits and other disclosures. Local population is sourced from Claritas. Claritas
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Canton, MA Series 2025 GO Bonds Assigned 'AAA' Rating; BAN Assigned 'SP-1+' Short-Term Rating
Canton, Massachusetts--Key credit metrics
Most recent 2024 2023 2022
Economy
estimates are point in time and not meant to show year-over-year trends. GCP--Gross county product. PCPI--Per capita personal income. EBI--Effective buying
income. OPEB--Other postemployment benefits. NPLs--Net pension liabilities.
Ratings List
New Issue Ratings
US$5,555,000 Town of Canton, Massachusetts, General Obligation Municipal Purpose Loan, Series 2025, dated: August
14, 2025, due: June 01, 2045
Long Term Rating AAA/Stable
US$35,000,000 Canton Town, Massachusetts, General Obligation Bond Anticipation Notes, dated: August 14, 2025, due:
August 13, 2026
Short Term Rating SP-1+
New Rating
Local Government
Canton Twn, MA Limited Tax General Operating Pledge BAN SP-1+
Ratings Affirmed
Local Government
Canton Twn, MA Limited Tax General Operating Pledge AAA/Stable
The ratings appearing below the new issues represent an aggregation of debt issues (ASID) associated with related maturities. The maturities similarly reflect our
opinion about the creditworthiness of the U.S. Public Finance obligor's legal pledge for payment of the financial obligation. Nevertheless, these maturities may have
different credit ratings than the rating presented next to the ASID depending on whether or not additional legal pledge(s) support the specific maturity's payment
obligation, such as credit enhancement, as a result of defeasance, or other factors.
Certain terms used in this report, particularly certain adjectives used to express our view on rating relevant factors, have specific meanings ascribed to them in
our criteria, and should therefore be read in conjunction with such criteria. Please see Ratings Criteria at
https://disclosure.spglobal.com/ratings/en/regulatory/ratings-criteria for further information. A description of each of S&P Global Ratings' rating categories is
contained in "S&P Global Ratings Definitions" at https://disclosure.spglobal.com/ratings/en/regulatory/article/-/view/sourceId/504352. Complete ratings
information is available to RatingsDirect subscribers at www.capitaliq.com. All ratings referenced herein can be found on S&P Global Ratings' public website at
www.spglobal.com/ratings.
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Canton, MA Series 2025 GO Bonds Assigned 'AAA' Rating; BAN Assigned 'SP-1+' Short-Term Rating
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