The city of San Diego’s credit rating was upgraded by Fitch Ratings, making it cheaper for the city to borrow money on the public bond market, it was announced Friday.
Fitch Ratings, one of the nation’s top three credit rating agencies, boosted its rating on San Diego’s general obligation bonds to A+ from BBB+.
Moody’s Investor Service also upgraded its rating on the city’s water revenue bonds to A1 from A2 and lifted the negative outlook to stable, Mayor Jerry Sanders said.
“These upgrades not only validate the city’s prudent fiscal management, but they also lessen the cost to borrow money because the interest rate we pay will be lower with this more favorable rating,” Sanders said.
Fitch stated that its rating reflects the city’s “historically sound credit profile” and recent operational changes.
“The upgrades reflect Fitch’s recognition of the city’s significant management, structural and procedural changes, many implemented in response to the city’s pension funding and disclosure turmoil and widespread study commissioned by the city,” the company stated.
San Diego’s credit rating has been improving in recent months, following years of decline amid financial crisis.
In 2004, Standard & Poor’s suspended San Diego’s credit rating after it was learned the city failed to properly disclose the scope of the underfunding in its pension system. It wasn’t until May that Standard & Poor’s restored the city’s rating.
Since then, all three major credit rating companies have boosted San Diego’s credit rating.
The improved rating means it will be easier for the city to borrow money for overdue infrastructure improvements by issuing municipal bonds.
San Diego is now in the process of issuing $638 million in bonds for water system projects throughout the city and to refinance existing debt at more favorable rates.
Jay Goldstone, the city’s chief operating officer, said the city’s improved credit rating will make accessing the market for the water bonds “easier and definitely the cost of funds cheaper.”