Two major bond rating agencies are keeping the City of Cincinnati’s bond ratings the same, but one of them has upgraded its financial outlook for the city.
Cincinnati officials said in a press release Tuesday that Moody’s Investors Service reaffirmed the city’s general obligation bond rating of “Aa2.” But Moody’s moved its financial outlook for the city from the negative category to stable.
“The stable outlook reflects our opinion that indications of economic recovery combined with management's plan and expected capacity to strengthen the city's financial position will support current credit quality,” Moody’s wrote in the ‘Outlook’ section for the report. “A recent Cincinnati Retirement System (CRS) settlement agreement is expected to moderate the city's annual pension costs and unfunded liabilities.”
The city said in the release another rating agency, Standard & Poor’s (S&P), has verbally reaffirmed the city’s current rating of "AA-" with a stable outlook. The full S&P report will be released later this week.
“This is great news for the City and serves as a strong sign of Cincinnati’s improved economic position,” said City Manager Harry Black in the press release. “We are strategically positioning ourselves for long-term success.”
The city’s bond rating is important because it allows the city to borrow money for major projects. The rating information is also used by investors when they are considering whether to buy city bonds.
“We have worked hard to get our fiscal house in order by balancing the budget and tackling the pension issue,” Mayor John Cranley said in the release. “I appreciate Moody's recognizing our hard work.”
When meeting with the rating agencies, the city administration presented information about the region’s growing economy and revenue stream, the recently signed pension agreement, and the capital improvement plan included in the recently adopted city budget. Officials also discussed the work of the city’s new Office of Performance and Data Analytics.
After the 2008-2009 recession, the city’s bond rating and financial outlook were downgraded because of structurally unbalanced city budgets and the growing unfunded liability in the city’s pension system.