One of the nation's leading bond-rating agencies upgraded the city of Baltimore's rating yesterday - a relatively rare occurrence that analysts said was based on the city's continued economic growth over the past several years.
Standard & Poor's, which visited Baltimore this month, moved the city up one position - from an A-plus bond rating to an AA-minus. The action will make it less costly for the city to borrow money and could save taxpayers millions in interest payments.
In upgrading the rating, the agency noted the city's increased reserves - which have grown in past years in part because a real-estate boom produced higher-than-expected revenues - as well as a more financially stable school system and new residential and commercial development.
"Baltimore has seen steady improvement in its economic and financial position over time, and reserves are at record levels, which should provide the city flexibility to meet future funding challenges," Robin Prunty, a credit analyst with the agency, said in a statement. "The long-term growth prospects for the Baltimore-Washington ... region are strong, and the city is well-positioned to participate in this growth."
The agency last changed the city's bond rating about seven years ago, according to officials in Mayor Sheila Dixon's administration. Officials reported that another rating agency, Moody's, also upgraded the city by one position, but that could not be confirmed late yesterday.
"The ratings provided by Moody's and Standard & Poor's recognize the strong financial position that the city currently is in," said Edward J. Gallagher, who has served as the city's finance director for years. "It also addresses the fact that the city is moving forward in areas of housing and economic development."
Last June, Standard & Poor's upgraded its outlook for the city from "stable" to "positive."
The latest change will be applied to a $53 million bond issue that will be used to fund capital projects that were approved by city voters. The announcement comes as the City Council holds hearings on next year's $2.65 billion city budget.