Stonington — The town announced Thursday that its bond rating has been increased to AAA, the highest level possible.

The rating is a strong indicator of a municipality’s fiscal health and creditworthiness. Because higher rated bonds have a low risk of default, they carry a lower interest rate, which reduces the interest municipalities have to pay when they borrow money for projects such as the just completed $37.5 million renovation and expansion of the Deans Mill and West Vine Street elementary schools.

This in turn reduces the debt taxpayers have to repay.

The town also becomes the first in eastern Connecticut to be awarded the AAA rating from Standard & Poor's, according to Matthew A. Spoerndle, the senior managing director of Phoenix Advisors.

The Milford firm has managed the town’s bond sales in recent years, including the recent expansion and renovation of the elementary schools.

“This is a great outcome for the Town and reflects what a great team the town has working on these significant financial issues,” Spoerndle said in the town’s announcement of the rating increase.

The town’s debt, overall financial condition, demographics, the area’s economy and management practices all help determine bond rating.

First Selectman Rob Simmons added, “The Stonington Board of Finance has worked diligently over the past few years to keep our taxes down and the Planning Department has brought in substantial new projects all of which have contributed to our exceptional AAA status.”