The city of Bainbridge Island has received an Aa3 rating from Moody’s, a leading investor service that’s considered one of the top three credit rating agencies.

The rating reflects the city’s standing for 2013 unlimited tax general obligation refunding bonds.

The rating comes as the city is in the midst of refinancing $5.3 million in bonds from 2002 and 2004.

“In April, we began refinancing outstanding debt with the city with lower rates, just like you would refinance your house,” said Ellen Schroer, finance director for the city.

“One step for city is getting credit ratings checked,” she said. “We did that at the end of July and they issued the rating last week.”

“It says in (Moody’s) opinion (report) they are affirming that rating for all outstanding bonds,” Schroer added. “We went to them for one particular refinancing, but it applies to all of the city’s outstanding debt obligations.”

Moody’s also gave the city an A1 rating for its outstanding $18.1 million of tax general obligation bonds, as well as an Aa3 rating on the outstanding $5.6 million it has in unlimited tax bonds.

The ratings are a pat on the back for the city, and show that the city is improving financially, according to City Manager Doug Schulze. Schulze also noted that the rating reflects the city’s strong management team.

The news was a notable turnaround between the city and Moody’s, which put the city on a credit watch list in 2010. That action caused any loans for the city to be very expensive; and the city was brought off the watch in 2011.

Both ratings, Aa3 and A1, are high quality ratings that show very low credit risk associated with the city, with the ability to repay short-term debts.

Schulze said that Moody’s gave the city a thumbs up for having a “moderately-sized tax base with no taxpayer concentration, strong reserve levels, trend of structural balance in the last three audited years and low direct debt burden.”

Moody’s, however, also noted a few challenges facing Bainbridge Island, including the fact that property values have not entirely rebounded from declines experienced in the recession.