Moody’s Upgrades Annapolis to Positive Outlook
Annapolis, MD (5-8-13) Annapolis Mayor Joshua J. Cohen announces that the first of the three rating agencies has released its bond rating and Moody’s Investors Service, Inc. assigned a rating of Aa3 with a positive outlook.
“This positive outlook from Moody’s sends a welcome message to Annapolis taxpayers that the City has been successful at stabilizing our finances even in the face of formidable fiscal challenges,” Mayor Cohen said. “I commend the City Council for resisting the easy way out and instead supporting the difficult but responsible decisions necessary to put the City on solid ground. I also commend our professional management team for bringing proactive management practices and unprecedented transparency to our finances.
“Though we have made tremendous strides, we have more work yet to do. I urge the Finance Committee and City Council to remain resolute in their commitment to continue the progress we have made.”
Moody's has affirmed the Aa3 rating and upgraded the outlook from stable to positive for $86 million of outstanding general obligation debt and $15 million General Obligation Public Improvements Bonds.
The City is anticipating purchasing bonds later this month and the current rating may mean a lower interest rate on a variety of bonds that will pay for capital projects within the city.
The positive outlook reflects Moody's belief that the City will maintain improved reserve levels and continue to replenish its liquidity position following the return to structural balance in the enterprise funds.
The Aa3 rating reflects the City's sizable and diverse tax base, satisfactory reserve levels, narrow but improved liquidity position, as well as a manageable debt burden. The positive outlook reflects the City's proactive measures and expected future commitment to raising revenues and reducing expenditures to maintain the City's reserve position going forward.
“Over the past two years we were able to be proactive and show a pattern of fiscal discretion,” Finance Director Bruce Miller said. “We have fully repaid all of our short-term lines of credit and tax anticipation notes, and put millions of dollars toward funding our long-term liabilities.”
Two years ago Moody’s downgraded Annapolis’ bond rating and assigned the City a negative outlook. Last year, in recognition of the City’s prudent fiscal steps, Moody’s took Annapolis off their watch list and restored the stable outlook.
“The stable outlook reflects the city’s proactive measures and expected future commitment to raising revenues and reducing expenditures to improve the city’s reserve and liquidity position going forward.”
This year Annapolis received a positive rating from Moody’s.
Moody’s characterizes the City’s strengths as having:
A large tax base anchored by public sector presence
- Recently improved reserve levels that are expected to be maintained given recently adopted formal fiscal policies and procedures
Some of the City’s challenges include:
- A narrow liquidity position
- Large receivables from enterprise funds
The other two bond rating agencies, Fitch and Standard & Poor's, are expected to release their ratings later today.