Mayor John Hickenlooper and Claude Pumilia, the City’s Chief Financial Officer and Manager of Finance, announced today the City and County of Denver has received the highest possible bond rating from all three major credit ratings agencies.
Standard & Poor’s, Moody’s and Fitch each give the City and County of Denver’s General Obligation bonds a triple-A (AAA) rating. Denver is the only city or county in Colorado to hold AAA ratings from all three credit agencies.
“Good government is measured in many ways,” Hickenlooper said. “It’s rewarding to have three national agencies recognize the City’s creditworthiness with their highest ratings. This is the result of tough choices Denver has made in recent years to deliver balanced budgets and operate the City government efficiently and effectively.”
Moody’s and Fitch recently undertook a ratings re-calibration assessment for all of their municipal bond ratings. The re-calibration was an effort to bring municipal bond ratings into line with global ratings scales for corporate bonds and sovereign debt. While not an upgrade due to improved credit, the higher ratings from Moody’s and Fitch will likely translate into lower borrowing costs for the City and County of Denver. Standard and Poor’s upgraded the City’s bond ratings to AAA in September 2008.
“These ratings reflect the historically low default rate of municipal bonds compared to other types of debt, as well as Denver’s diversified economic base and proactive and prudent financial management,” said Pumilia, the City’s Chief Financial Officer. “The higher ratings will help support investor demand and lower the cost to taxpayers when the City needs to borrow money.”
Bond ratings are an independent opinion of the general creditworthiness of an obligor, such as the City of Denver, based on relevant risk factors. The ratings are based on an issuer’s ability to repay the principal and interest of its short-term or long-term debt obligations on a timely basis. For General Obligation bonds, ratings are based primarily on four main factors: the economy; the issuer’s financial position; the issuer’s current and future debt burden; and financial management.
“These rating upgrades are a direct reflection of the innovative, hard work by Claude Pumilia and his entire team in Finance to ensure our City is run more like a business,” Hickenlooper said.