SAN FRANCISCO—San Francisco Mayor Edward M. Lee announced on January 11 that the City of San Francisco has seen a significant boost in its credit rating, according to a press release from the Mayor’s office.
Bond rating agencies Moody’s Investors Service (Moody’s), Standard & Poor’s (S&P) and Fitch Ratings (Fitch) met with the city in December 2015 to discuss the proposed sale of approximately $52.1 million in general obligation bonds to assist in financing the construction, reconstruction, purchase and/or improvement of park and recreation facilities located within the City under the jurisdiction of the Recreation and Park of the Port of San Francisco.
Fitch upgraded the credit rating to AA+ from AA on the City’s general obligation bonds and also upgraded its rating to AA from AA- on the City’s lease revenue bonds and Certificates of Participation (COPs). In addition, Moody’s and S&P affirmed the City’s Aa1/AA+ credit rating, respectively, on the City’s general obligation bonds and rated Aa3/AA, respectively, the City’s lease revenue bonds and COPs.
The lease revenue bonds and COPs ratings are one or two levels lower than the City’s general obligation bonds ratings; a normal relationship between general obligation bonds and general fund-secured lease obligations. Moody’s, S&P and Fitch maintained rating outlook of stable.
“Because of our strong, diverse economy and fiscally responsible budgetary and financial controls, San Francisco’s credit rating has never been higher,” said Mayor Lee. “San Francisco is creating investor confidence with strategic investments and economic policies that are working. Although our revenue growth is strong and outpaces the State and the Nation, we will continue our long term financial management and reduce volatility to weather the challenges of a potential economic downturn.”
Fitch points out the upgrade “reflects the City’s fiscally prudent institutionalized financial policies which, along with several years of strong economic and revenue growth, have resulted in robust rainy day and budgetary reserves. These policies are expected to result in maintenance of solid financial flexibility through the economic cycle.”
The three rating reports indicate San Francisco’s very strong liquidity; large, diverse and exceptionally strong economic base; very strong financial management and policies; and strong financial operations. San Francisco is expected to sell the Bonds on January 20, 2016 and is expected to close near February 2, 2016.