BRISTOL, Va. - Moody's Investors Service on Friday upgraded the city's bond rating and outlook.
Moody's assigned a Baa2 underlying rating and an Aa1 enhanced rating to the city's $76 million refunding bonds scheduled to be issued later this year as part of a massive refinancing, according to a statement from the New York-based firm.
The Baa2 underlying rating means Moody's has judged the city to be a "moderate credit risk" with a high or adequate ability to pay its debts without outside help. The enhanced rating (Aa1) adds insurance and other funding failsafes to the calculations, assessing Bristol as a low credit risk.
"The Baa2 underlying rating reflects the city's adequate but improving financial position that will be challenged by increasing fixed costs over the near term," according to the Moody's statement. "The rating also reflects the city's moderately-sized tax base with below average wealth levels and elevated debt burden."
Moody's review now lists the city's credit rating outlook as "positive," an upgrade from the previous rating of "stable." Two years ago, it was listed as "negative."
This revision is due in large part to an improving local and regional economy and the city's attempts to eliminate borrowing through improving fund balances, enhancing financial reserve policies and reducing uncertainty with respect to future indebtedness, according to a statement from the city.
"During our most recent meeting with Moody's, we were able to highlight a number of economic development successes, which will only serve to further improve the city's overall fiscal and economic health," Mayor Kevin Mumpower said in the written statement.
The service was able to give the city an Aa1 enhanced rating because of the Virginia Localities Intercept program, which allows the state comptroller to resolve municipalities' debts. That extra security improved Bristol's overall outlook.
"We are encouraged to learn that an outside independent credit rating firm is effectively agreeing with the key financial steps City Council and management are taking to enhance Bristol's financial stability," City Manager Randall Eads said. "If we continue to maintain the path that has been established, we understand from the rating agencies that there is a good chance for an overall credit rating upgrade within the next two fiscal years."
On Tuesday, the City Council voted to refinance the short- and long-term bonds, which included more than $50 million tied to The Falls commercial center. The City expects to complete the bond financing by mid-February.
"This continued upward trend in credit assessment will result in lower-than-forecasted interest rates when the financing is completed," according to David Rose, senior vice president and manager of public finance at Davenport & Company LLC, the city's financial advisers.
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