News from City Hall
City Communications Office
City of Kansas City, Mo.
CONTACT: City Communications Officer, 816-513-1349
FOR IMMEDIATE RELEASE: May 11, 2010
City Credit Ratings Recalibrated
The City of Kansas City, Missouri’s benchmark bond rating for general obligation debt has been recalibrated from A1 to Aa2, as a result of Moody’s Investors Service recalibrating its credit rating scale for United States municipal entities to a global rating scale. This recalibration also changes the City’s credit rating for annual appropriation-backed and special obligation debt from their previous rating of A3 to a global scale rating of A1. Credit ratings for revenue supported debt were recalibrated and resulted in credit rating changes for the City’s water and sewer debt. These changed from A1 to Aa2 and Aa3 to Aa2, respectively.
Fitch Ratings has also recalibrated its rating scale for municipal entities to a global rating scale. As a result, the City’s general obligation rating from Fitch was changed from AA to AA+ and the special obligation rating moved from A+ to AA-. Fitch does not rate the City’s Water and Sewer debt.
“Given the credit rating agencies recent history, it is good news that they are finally recognizing the inherent credit strength of municipalities like Kansas City, Mo.," said Mayor Mark Funkhouser. "In my administration we have tried to toe the line on our public debt, which has not risen appreciably since I took office. It is my hope that these ratings changes will soon result in tangible benefits to the City’s tax and rate payers."
City Finance Director Randall Landes cautions that even though many of the City’s credit
ratings have moved up on their respective rating scales, these ratings changes should not be viewed as credit rating upgrades.
“The City’s credit fundamentals, and those of its other discretely rated credits (e.g. water, sewer and aviation) have not changed,” said Landes. “The move to global rating scales by these agencies places the City’s credits on par with corporate credits and reflects the historically remote nature of municipal defaults. The credit markets, for the most part, have already accounted for this recalibration when determining the price they are willing to pay for the City’s debt; however, over time the City may experience some relief in the form of reduced interest expenses.”
Media inquiries and requests for more information about this issue should be directed to City Treasurer, Tammy Queen at 816-513-1029.