NEW ORLEANS – Today, Standard and Poor’s (S&P) Global Ratings 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. At the same time, S&P assigned its 'AA-' long-term rating and stable outlook to the City's series 2016 general-obligation refunding bonds. S&P based the upgrade on its view of New Orleans’ improvement in current and projected economic growth and income levels and total available reserves as percent of expenditures, City reps said.
This is the fourth S&P rating upgrade for the City of New Orleans since Mitch Landrieu became mayor in 2010 – the first upgrade occurred in 2013 to ‘BBB+’ from ‘BBB,’ the second occurred in March 2015 from ‘BBB+’ to ‘A-,‘ the third occurred October 2015 from ‘A-‘ to ‘A+’ – and the new rating far exceeds the City’s general-obligation credit rating that it had prior to Hurricane Katrina. The rating upgrade will allow the City to obtain lower interest rates and save residents money, City reps said.
“Upon taking office in 2010, we confronted New Orleans’ fiscal challenges head on and with eyes wide open,” said Mayor Mitch Landrieu. “Today’s announcement by Standard & Poor’s is continued validation of the progress we have made not only closing the huge $97 million budget hole we inherited, but in reviving the City’s finances by cutting smartly and reorganizing government and delivering better services. I also want to thank our partners on the City Council who have worked with us on budgeting smartly and turning the city around. New Orleans is once again an ascendant city that is growing, creating new jobs and building for our future.”
The City of New Orleans general-obligation debt is managed by the Board of Liquidation, City Debt., that 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.
S&P issued its credit upgrade based on the New Orleans’ strong economic outlook, strong fiscal management, strong budgetary flexibility, very strong liquidity and very strong institutional framework, in addition to recent increases in assessed value and commercial retail expansion which should allow for growth in general fund revenue collections, City reps said.