Moody’s Upgrades City’s Credit Bond Rating to A1 from A2
S&P Revises Rating Outlook to Positive While Maintaining Credit Rating of A
Moody’s: City’s credit bond rating upgrade reflects improvements to city’s reserves, a growing local economy and tax base, and improved financial condition with retirement of MAC debt
S&P: Improved outlook reflects return to positive financial operation in FY-2021 following COVID-19-related deficit in 2020, final payment of MAC debt, anticipated growth of City’s available reserves, and ongoing growth within City’s tax base
Mayor Madden: Updates, improvements to City’s credit rating are more evidence that administration’s approach to repair the City’s financial foundation is working
TROY, NY (January 14, 2022) – Mayor Patrick Madden today announced the City of Troy’s bond credit rating has been upgraded to A1 from A2 by Moody’s Investors Services. S&P Global Ratings revised its outlook of the City’s A bond credit rating to positive from stable. The updates to the City’s credit rating represent the continued overall positive outlook for the City’s financial condition from two of the world’s leading credit rating agencies.
Moody’s cited the City’s improved reserves position in fiscal years 2021 and 2022, the growing local economy and tax base, and improved financial condition with the retirement of existing debt in their rating upgrade. The City’s tax base has been on a strong positive trend following years of declines in the early 2010s.
S&P noted several factors which contributed to the improvement of the City’s credit rating outlook, including:
- The City’s return to positive financial operation in FY-2021 following a COVID-19-related operating deficit in 2020;
- Final payment of the City’s MAC debt, and subsequent increased operational flexibility with retirement of the debt;
- Anticipated growth of the City’s available reserves; and
- Ongoing growth within City’s tax base.
S&P also cited the City’s efforts to address previously blighted properties in the City’s neighborhoods, and the recent $10M Downtown Revitalization Initiative grant award to support $300 million in economic development projects.
Mayor Madden said, “The latest improvements to the City’s credit bond rating by Moody’s Investors Services and S&P are more evidence that our efforts to repair the City’s financial foundation is working. It also reflects the hard work and strong oversight of municipal spending of this administration, including implementation of six consecutive balanced budgets, and commitment to fact-based budgeting—all recognized by credit rating agencies as central to obtain a rating upgrade.”
According to Moody’s, the City’s overall financial position will continue to improve due to the current administration’s approach to budgetary practices that returned the city to structurally balanced operations. However, Moody’s warned that a return to structurally imbalanced budgets and declines in reserves could result in a rating downgrade.
“While this and previous upgrades are great news and represent important progress, it is important to understand we still have more work ahead of us,” added Mayor Madden. “I extend my assurances to the public of this administration’s unwavering commitment to exercise the strictest of financial oversight on City budgets and spending in the years to come.”
The City’s credit bond rating was previously given a revised outlook to positive from stable by Moody’s in 2018. In 2017, Moody’s revised the City’s bond rating outlook from negative to stable. In 2020, S&P raised the City’s bond rating from A- to A.
Retirement of City’s MAC Debt
In January 2022, the City’s final debt payment to the Municipal Assistance Corporation (MAC) will be made. This final payment triggers dissolution of the MAC, a multi-month process which marks the end of the city’s annual MAC debt obligations. It is anticipated that the dissolution will be complete by the end of 2nd quarter of this year. Since 1996, the City of Troy has made annual payments of approximately $6-7M to the MAC.
“Retirement of the City’s MAC debt obligations represents a new chapter for the City of Troy, setting us on a path toward a brighter, stronger future,” Mayor Madden stated. “This accomplishment lifts a painful 25-year burden off taxpayers, and signals the establishment of a new financial foothold for the City. The City administration has and will continue to work with the New York State Office of the Comptroller and Troy MAC on dissolution of the Municipal Assistance Corporation this year.”
The Troy MAC is a corporate governmental agency established in 1996 to help the City avoid bankruptcy due to repeated overspending by City leaders during the 1980s and a controversial lease purchase agreement of City Hall. Approximately $65M of financial assistance was provided by New York State in 1996 to resolve the City’s then-outstanding debt obligations and established a repayment schedule for the subsequent two and a half decades.
John Salka, Communications Director
[email protected] / (518) 279-7131