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Good news, everyone! Moody and S&P know there’s a lot to like about Lowell (city press release):
Standard & Poor Upgrades Lowell’s Bond Rating
Moody’s Assigns a Positive Outlook for the City
(Lowell, MA) – - September 5, 2013, – As a result of very favorable impressions about the City during their recent bus tour of various economic development sites in Lowell, two rating agencies upgraded their outlook for the Cities future. Standard & Poor’s upgraded Lowell’s long-term bond rating from A to A+. S & P cited a stable tax base poised for future growth and development, stronger reserves, operational flexibility through some unused levy capacity and low overall debt burden. They praised management for “continually working toward mitigating the effects of long-term pension and other postemployment benefit (OPEB) liabilities.” The ratings agency reclassified Lowell’s reserve levels from “adequate” to “good.”
While Moody’s Investors Services affirmed Lowell’s long-term bond rating of A1, it assigned a new “positive” outlook to the City. “The A1 rating reflects the city’s sizeable and diverse tax base and manageable debt burden. The positive outlook reflects the city’s improved financial position, including an increase in excess levy capacity to $12 million, and reductions in the city’s long term OPEB liability.” Moody’s cited as strengths the presence of higher education and regional health care institutions, development in the Hamilton Canal District, conservative budgeting, and financial forecasts and policies.
Lowell City Manager Bernard F. Lynch call the ratings reports “Votes of confidence that reflect a drastic improvement from 2007 when Moody’s rated Lowell’s bonds A3 with a “negative” outlook and from 1997 when the bonds were rated Baa2. Our financial flexibility is greater than it has been since 2003.”
Challenges remain for the City, primarily to continue to build reserves and control long-term liabilities.
If you have further questions, please contact CFO, Tom Moses at email@example.com. Full texts of both reports are available on the city’s website, http://www.lowellma.gov
We’ve had several upgrades at this point during Lynch’s tenure, if memory serves. (Two other ones besides this, I think?) Anyway, while the City Councils of the recent past can take some credit, you have to admit that the budgets that Lynch brings forth, the investment he’s been able to move along despite the bad economy, and the managing of Lowell’s budget have a lot more to do with these positive outlooks than the shifting politics that should (and sometimes does) focus on the big picture overall.
I don’t pretend that I totally trust the ratings agencies in any case (they did, after all, screw up bank/mortgage-backed securities ratings, and they tend to give muni’s a little bit more of a pessimistic outlook than they might actually have (except in very rare cases, like Detroit, municipalities don’t go bankrupt, and/or often have a state system that steps in before it gets that bad, so it’s extremely rare that muni bond holders are left without a payout.) But if all things weight loss and bond ratings are relative, an increasingly upbeat outlook by multiple bond ratings agencies is certainly the right direction in which to be headed.
And, of course, makes borrowing even cheaper for the city for future investments, which only helps keep our budget in line.
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