NEW ORLEANS – On Friday, Fitch Ratings upgraded its long-term and underlying rating from ‘A-’ to ‘A+’ on the City of New Orleans’ general-obligation debt and issued a stable outlook for all ratings. At the same time, Fitch assigned its 'A+' long-term rating and stable outlook to the City's series 2016 general-obligation refunding bonds. Fitch Ratings based the upgrade on its view of New Orleans’ improvement in current and projected economic growth and the City’s landmark settlement last year with the New Orleans firefighters union and pension board on a decades long back pay lawsuit and pension lawsuit.
Fitch began rating the City of New Orleans in 2007 and last upgraded the City in April 2010 from ‘BBB’ to ‘A-‘. Today’s announcement of a rating upgrade from ‘A-‘ to ‘A+’ will allow the City to obtain lower interest rates and save residents money.
“Today’s announcement by Fitch is another sign that that the City of New Orleans is heading in the right direction,” said Mayor Mitch Landrieu. “This is the second ratings upgrade the City has received this week and is another sign that the world is taking notice of our robust growth and strong fiscal management. It is important that well known credit rating agencies such as Fitch and Standard & Poor’s recognize our progress in bolstering the City’s financial profile. By cutting smartly, reorganizing government and committing ourselves to delivering better services, we are charting a new course as an ascendant city that is growing, creating new jobs and building for our future.”
Earlier this week, Standard & Poor’s upgraded its long-term and underlying rating from ‘A+’ to ‘AA-’ on the City of New Orleans’ general-obligation debt and issued a stable outlook for all ratings.
The City of New Orleans general-obligation debt is managed by the Board of Liquidation, City Debt. The Board of Liquidation, City Debt, is in the process of refinancing $50 million of general-obligation debt and in the next few months will issue, at the City’s request, $70 million of new general-obligation bonding to improve City streets and facilities. Refinancing will lead to lower overall interest rates and save city taxpayers in terms of lower debt service in future years, City reps said. For example, when borrowing funds for construction projects and road repairs, the City will be able to devote more money to actually build buildings and fix roadways, they said.
Fitch issued its credit upgrade based on the New Orleans’ solid economic growth that continues to diversify from a historical reliance on shipping and energy with gains in healthcare and technology, increased revenues, manageable debt and rebuilt operating reserves. In addition, Fitch noted, "The city’s record during the current economic recovery—boosting reserves and increasing pension contributions—indicates a commitment by the current administration to bolster the city’s financial profile during periods of expansion when economically sensitive revenues are increasing. Fitch’s expectation is that any deferral of required spending in the future would be minimal during growth periods.”
