Upgraded Outlook from Moody’s Indicates Steady Economic Growth
April 18, 2014
This week city officials were notified by all three bond rating agencies: (1) Moody’s Investors Service, (2) Standard & Poor’s Rating Services and (3) Fitch Ratings Inc. that the City of Albuquerque has once again received bond ratings of Aa1, AAA, AA+, respectively, for its General Obligations Bonds and Gross Receipts Tax Bonds that will be sold in the coming weeks. In releasing details of the ratings, all three rating agencies highlighted Albuquerque’s diverse economy, strong tax base, strong financial management policies, strong budgetary performance and favorable debt profile with rapid payout rate.
Mayor Richard J. Berry was pleased to learn the news. “Our high bond ratings at the City of Albuquerque are the results of sound financial management practices and affirm that we continue to run an efficient government in which we are good stewards of taxpayer resources. It serves as further evidence that our local economy is trending in a positive direction and if we remain focused on creating a business environment that encourages entrepreneurism and job growth, we will continue to see progress,” said Mayor Berry.
In addition to issuing a strong bond rating, Moody’s upgraded the city’s outlook from negative to stable, reflecting the city’s stabilized financial operations and slow but steady economic growth. The upgrade to a stable outlook is estimated to save the city 2.5 basis points in interest cost on both the General Obligation and Gross Receipts Tax Bonds, which equates to approximately $91,000 and $115,000 respectively.
The city’s “AAA” bond rating from Standard & Poor’s is the highest bond rating a municipality can achieve. Out of the 8,000+ cities Moody’s rates, only about 2.5% have a higher rating than Albuquerque’s rating.
The rating agencies highlighted, as a strength, the city’s large and diverse tax base for property and gross receipts taxes. Gross receipts taxes are on track to grow for the third consecutive fiscal year and are currently 3.1 percent higher than the same period last year. Sixteen out of 23 GRT sectors are showing improvement, with Construction, Professional, Scientific & Technical, and food-related sectors showing the largest gains. The March gross receipts tax distribution was 12.2 percent above the March 2013 amount.