Remember a few months ago when cities, states and, by the way, the U.S. government were helplessly watching their credit ratings tumble into a ditch?
Well, Philadelphia’s credit rating just went up. A little.
Standard & Poor’s Ratings Services has bumped the city’s long term and underlying rating from BBB to BBB+, and may raise it again soon.
Admittedly, BBB+ isn’t stellar, ranking right about in the middle of investment grade bonds.
But it’s better than a BBB – and more importantly, it may represent a trend..
In a press release for the ratings change, S&P praised the city for “eliminating a large general fund deficit in fiscal 2011,” and for a projected fund surplus this year.
As a result, Philadelphia should remain in a stable position, even if the general economic recovery slows down, according to S&P credit analyst Nicole Ridberg, who wrote the press release.
“Philadelphia’s strong management practices will allow it to continue to take the necessary actions to address imbalances and balance its five-year plan,” she said.
So what is the city doing with its new possibilities in financing? Back in less disciplined times, it might have indulged itself with a no-bid contract or two. Instead, this will help Philadelphia get better interest rates as it borrows $22 million in bonds and $95 million in refinancing – a process that’s already been in the works.
Leaders at City Hall are roundly applauding each other over this news, and not without cause – with Mayor Michael Nutter praising the painful efforts of “City Council, the Administration and most importantly the taxpayers of Philadelphia who provided support for some very difficult decisions.”