Moody's knocks Minneapolis credit rating down a notchMINNEAPOLIS (AP) — Moody's Investor Service has lowered Minneapolis' credit rating by a grade, which could result in higher borrowing costs for construction projects.
MINNEAPOLIS (AP) — Moody's Investor Service has lowered Minneapolis' credit rating by a grade, which could result in higher borrowing costs for construction projects.
Moody's said Monday that it lowered the city's rating from AAA, the highest grade, to Aa1. It cited the city's declining property values, high pension liabilities, sizeable fixed costs, dependence on state revenue and above average debt levels, the Star Tribune reported. Credit ratings help determine interest rates on municipal bonds.
The city maintained its AAA rating with the other two major agencies, Fitch and Standard and Poor's. And Moody's gave it a "stable" outlook, based on expectations of a strengthening tax base and other considerations.
Minneapolis Mayor R.T. Rybak had touted his city's return to a top credit rating a few years ago. Rybak is stepping down after his third term ends this year.
Kevin Carpenter, the city's chief financial officer, questioned Moody's methodology and its emphasis on the pension obligations. Minneapolis pension payments, he noted, have always been paid in full at the benefits levels promised.
"While we think that the action by Moody's is an overreaction to one element of the City's financial portfolio, you should remember that Minneapolis remains among the top-rated cities and local districts in the country," Carpenter wrote in an email to city council members.