Bond rating agencies S&P Global and Fitch Ratings have assigned the highest credit rating possible to the City of Minneapolis, reflecting strong confidence in the City’s financial health ahead of a bond sale later this month.
“The upgrade to ‘AAA’ from ‘AA+’ reflects Fitch’s belief that the City’s long-term liability burden will remain moderately low over time driven by moderate future borrowing plans, statewide pension reforms and strong trends of population and income growth,” the rating agency noted. “The ratings also incorporate the City’s strong revenue growth prospects driven by an expanding population and income levels, broad independent revenue-raising ability, and solid budgetary management that has resulted in healthy reserves and considerable gap-closing capacity.”
This is the first time since 2016 that the City has gone to market with AAA ratings from both Fitch and S&P Global rating agencies. The City plans to sell $113.85 million in bonds within the next few weeks and these high ratings affirm the City’s creditworthiness and provide confidence to the bond holders. This also allows the City to borrow funds to finance critical capital projects at a lower interest rate and save taxpayer dollars.
The City goes through an extensive review process with the rating agencies where they evaluate factors such as the strength of management, the City’s institutional framework, financial policies, the amount of debt, long-term financial planning, current economic conditions and the amount of reserves the City has to withstand any unexpected revenue loss.
“This achievement is thanks to the incredible work of our Finance Department, led by CFO Dushani Dye,” said Mayor Jacob Frey. “We are committed to continuing smart fiscal decisions to ensure the long-term health of the city – and this rating upgrade is proof that our work is paying off.”
“We are thrilled with the outcome this year as we have worked hard during the last three years to get the agencies to see and validate the City’s efforts to effectively plan and manage City’s financial resources,” said Dushani Dye, the City’s chief financial officer.