Wednesday, July 20, 2022 – Cleveland – On Monday, Moody's Investors Service upgraded the City of Cleveland issuer rating to Aa3 from A1. The agency also assigned an Aa3 rating to the city's $45.9 million Various Purpose General Obligation Bonds, Series 2022A.
It has been more than 12 years since the City received such an upgrade.
Moody's also upgraded to Aa3 from A1 the ratings on the city's outstanding general obligation limited tax (GOLT), and special tax (subordinate lien income tax and subordinate lien unrestricted income tax) bonds. The rating on outstanding bonds payable from non-tax revenue has been upgraded to A1 from A2.
“We are pleased to announce these upgrades and to share that the financial outlook for the City—despite the many challenges we have faced in recent years—is stable and growing stronger,” said Mayor Justin M. Bibb. “We were able to achieve this rating thanks to the forward-thinking and dedicated work of our Department of Finance.”
The city's Aa3 issuer rating represents Moody's assessment of debt supported by a general obligation unlimited tax (GOULT) pledge. The city does not currently have any outstanding debt supported by a GOULT pledge. The pledge supporting the city's GOLT bonds is considered limited tax based on the statutorily imposed limit of ten-mills on the ad valorem property taxes pledged.
“This change means that the City’s future borrowing costs should go down and that we will be better able to expand our investor base—enhancing our ability to finance needed capital improvements throughout the City,” said Cleveland’s Chief of Finance Ahmed Abonamah. “This upgrade is a testament to the City’s resilience and highlights the benefits of our proactive and prudent approach to financial management, exemplified by the recent transfers to the City’s Rainy-Day Reserve Fund and the newly created Payroll Reserve Fund authorized by City Council last week.”
For a high-level overview of the rating and the research behind it, see Moody’s release: Research: Rating Action: Moody's upgrades Cleveland, OH's issuer rating to Aa3 & assigns Aa3 to GOLT bonds; outlook is stable - Moody's (moodys.com)
