City’s Moody’s Ratings Jump Two Scores to “Positive” in Spite of Pandemic
July 23, 2021
The City of Albuquerque has earned an Aa3 general obligation (GO) and gross receipt tax (GRT) rating from Moody’s Investors Services—a positive outlook resulting from expert budget management, smart spending, and by satisfying financial criteria outlined by Moody’s. According to Nasdaq, obligations rated Aa3 are judged to be of high quality and are subject to very low credit risk.
“In spite of some of the toughest times in Albuquerque’s history, we are receiving high ratings for our work to protect and strengthen our city’s fiscal health,” said Mayor Tim Keller. “With solid financial decisions, we avoided furloughs during the pandemic, invested in infrastructure and economic development, and set a foundation that will benefit Burqueños for years to come.”
The Moody’s outlook for Albuquerque was revised from “negative,” jumping past “stable,” to now being ranked as “positive.” The jump to the positive reflects cost-cutting measures implemented by the City in fiscal year 2020, resulting in an improved financial position, as well as maintaining a structurally balanced operating budget. According to Moody’s, Albuquerque’s GRT, which comprises a large portion of the City's budget, is expected to remain stable due to ongoing economic development and providing strong debt service coverage on outstanding GRT bonds.
The City of Albuquerque was recently awarded the Government Finance Officers Association’s (GFOA) Distinguished Budget Presentation Award, and also holds a ‘AAA’ rating from Standard & Poor’s (S&P)—the highest rating assigned by S&P Global Ratings, meaning the City’s capacity to meet its financial obligations is extremely strong.
"Throughout the pandemic, we were able to reduce City spending and utilize federal stimulus funds in ways that best benefitted Albuquerque and its citizens,” said Chief Financial Officer Sanjay Bhakta. “Our innovative financial decisions have garnered national recognition and kept our financial posture strong.”
Moody’s affirmation of the Aa3 rating is based on Albuquerque's strong expenditure management, improved financial position after receipt of federal coronavirus relief coupled, manageable direct debt burden, and large tax base.
“We’re looking at a strong economic recovery in Albuquerque, evidenced by GRT growth when comparing 2021 to 2020 and 2019,” said Director of Finance & Administrative Services, Renée Martinez. “We’re pleased with this rating and are committed to making prudent fiscal decisions for the people of Albuquerque.”
The Aa3 GRT rating reflects the linkages between the General Obligation Unlimited Tax (GOULT) and GRT ratings, and the special tax revenue stream tie to the general economy. The rating also considers a history of strong maximum annual debt service (MADS) coverage, a ten-year history of stable revenue collections, and adequate legal provisions, despite a lack of debt service reserve.