During the week of April 8, the finance director, city manager and I traveled to New York to meet with the three major credit agencies: Moody’s, Standard and Poor’s and Fitch. This is the third time this administration has visited the credit rating agencies, focused on rebuilding the City’s finances.
All three of us felt the meetings were quite positive. It is hard to predict the final ratings, but the feedback at the meetings was very encouraging.
For those who are not familiar with how the credit agencies functions, below is a brief overview as reported by Rebecca Marston, reporter for Business BBC News:
• Credit-rating agencies are Private-sector firms that assign credit ratings for issuers of debt. A credit rating takes into account the debt issuer’s ability to pay back its loan. That in turn affects the interest rate applied to the security, for example a bond, being issued. A credit downgrade can make it more expensive for a government to borrow money, whereas an upgrade can make it less expensive.
I believe the rating agencies recognize and value the approach we have been taking. We have recovered from the City’s fiscal crisis by addressing our fiscal challenges head-on. By reducing expenses and increasing revenues we have achieved three consecutive balanced budgets. By restoring more than $22 million into our fund balances, we have fully repaid all of our short-term lines of credit and tax anticipation notes. And even while addressing our immediate budgetary needs, we have still managed to allocate millions of new dollars towards our long-term liabilities. City Manager Mike Mallinoff and Finance Director Bruce Miller have guided us well in our policy decisions, overhauled the City’s internal processes and controls, brought transparency to our finances, and played a critical role in getting our fiscal house in order.
Annapolis has a stable outlook from all three major rating agencies, with the current rating for its long-term debt and restructuring plan:
• Moody’s Investors Service Aa3
• Standard & Poor’s AA
• Fitch Ratings AA+
The City is expeting the rating report from all three agencies in May.