Moody’s Investors Service assigned a MIG 1 rating to Troy’s bond anticipation notes for 2022
MIG 1 Rating is best quality rating available for BANs from Moody’s
Assessment is second time a BAN issuance from the City of Troy has earned MIG 1 designation from Moody’s
Mayor: Moody’s rating signals continued confidence in the fiscal management of budgets, spending and city’s overall financial health
TROY, NY (August 3, 2022) – Mayor Patrick Madden today announced that Moody’s Investors Service has assigned the City of Troy’s recent bond anticipation note (BAN) as MIG 1, the best quality rating available. The assessment is the second time a BAN issuance from the City of Troy has earned this designation from Moody’s.
According to Moody’s, the city’s MIG 1 rating reflects the city’s strong fundamental credit quality and A1 long-term credit rating, and established record of market access for prior BAN issuances.
Mayor Madden said, “This administration continues to deliver real results to stabilize and improve the City’s financial condition and invest back in our neighborhoods. Today’s BAN rating from Moody’s signals further confidence in the fiscal management of the city and our approach to strong oversight of city budgets, and I am pleased to share this important update with our residents on the fiscal health of our city.”
Deputy Mayor Chris Nolin said, “The continued positive assessment of the city’s bond rating and issuance notes by Moody’s is further evidence that the administration’s approach to financial management and budgeting is working. As a result, we can move forward with funding important capital improvements in public safety, recreation, and roadway improvements to improve quality of life for Troy residents and ensure the smooth delivery of city services.”
The City of Troy will issue $6.275 million in bond anticipation notes in 2022 for the following new capital projects:
- Annual Street Paving (2022)
- Golf Course Improvements
- Purchase of new ambulance (Fire Department)
- Improvements to Troy Police Department facilities
Prior Updates to City Credit Rating
Earlier this year, the City of Troy’s credit rating was upgraded to A1 from A2 by Moody’s Investors Service. Additionally, S&P Global Ratings revised its outlook of the City’s A bond credit rating to positive from stable.
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.
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. Both agencies cited the retirement of MAC debt as a factor in the ratings improvements.
Rebuilding the City’s Financial Foundation
The MIG 1 rating is the latest accomplishment in the Madden administration’s record of financial oversight and budgetary discipline to restore public trust in Troy’s finances, including:
- Development and approval of six consecutive balanced budgets since 2016
- Retirement of the city’s outstanding MAC debt
- Ending the practice of one-shots (ex. selling city assets to meet annual expenses) to balance budgets
On January 18th, 2022, the city made its final debt payment to the Municipal Assistance Corporation (MAC). The Troy MAC was 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.
“For the remainder of my term as mayor of this great city, I will serve as a check and balance against the return of poor financial practices and politically driven decisions that negatively impacted Troy’s growth and prosperity,” added Mayor Madden. “I am proud of the tough choices we made to rebuild public confidence in Troy’s fiscal stability, and the results speak for themselves.”
Background on Moody’s Investment Grade System
The Moody’s Investment Grade (MIG) is a ratings system used to gauge risk of municipal bonds and creditworthiness of the issuer. The system classifies BANs into four grades, with MIG 1 representing best quality. According to Moody’s, the MIG 1 BAN rating reflects the city’s long-term credit quality – currently A1 – and oversight of operations by the Municipal Assistance Corporation of the City of Troy (Troy MAC).
John Salka, Communications Director
[email protected] / (518) 279-7131