All three bond rating agencies upgraded the scoring on Atlanta’s general obligation debt this year, according to the reports which were released to the city over the past two weeks.
Bond ratings are important because the impact the amount of interest paid on debt.
Atlanta Mayor Kasim Reed said the ratings — AA+ from Standard & Poor’s and Fitch; Aa1 from Moody’s — represent the highest credit rating the city has had in more than two decades. In each case, the new ratings are the second-highest possible from each agency.
Each of the agencies also judged the city’s outlook as “stable.”
“The upgrade to Aa1 reflects the marked improvement, followed by stability, in Atlanta’s fiscal health due in part to various revenue enhancements, expenditure reductions, including pension reform, and formalized fiscal policies and practices,” Moody’s report says. “The Aa1 rating also reflects the city’s large, diverse tax base that serves as a hub for trade and transportation in the southeast region and has improved following the recession.
“Lastly, the rating also incorporates the city’s manageable debt burden and lowly funded, albeit manageable, pension plans.”
Moody’s also listed challenges facing the city: above average pension burden and high fixed costs; high poverty and above average unemployment; and significant capital needs expected to lead to increased debt burden.
But it said it found the city’s outlook to be “stable” because of a “diverse and growing tax base, which will continue to benefit from its position as an economic and employment center,” according to the report.
Each of the ratings applies to $354 million in general obligation debt; $93.8 million in revenue bonds issued through various authorities; and $79.7 million in limited tax general obligation funds issued through the Atlanta Fulton County Recreation Authority. The ratings also apply to $8 million in General Obligation bonds scheduled to be sold this month.
The Standard & Poor’s report said its rating was based on a “very strong economy, … strong management, with `good’ financial policies, … strong budgetary performance, with a slight operating surplus in the general fund, … very strong liquidity, … and very weak debt.”
“These upgrades reflect the commitment of my administration to restore the City of Atlanta’s finances and put us on a solid fiscal foundation moving forward,” Reed said in a prepared statement. “Despite the economic challenges of the past, we have increased the city’s reserves, worked with the Atlanta City Council to pass sound, balanced budgets, and invested in public safety and young people.
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