Moody’s removes Seattle from its negative watch list
Seattle’s Aaa/Aa1 bond rating now considered ‘stable’
SEATTLE – Mayor Mike McGinn announced today Moody’s Investor Service has removed its “negative outlook” on its Aaa/Aa1 rating of the City of Seattle general obligation bonds.
“We are pleased with Moody’s decision,” McGinn said. “It underscores our belief that the local economy and the City’s finances are fundamentally strong, diversified and well managed. Our experience weathering the recent recession demonstrates this resilience.”
McGinn noted this is good news for taxpayers because maintaining strong bond ratings means the City can borrow money at lower interest rates for long-term investments in its infrastructure.
McGinn said preserving the City’s strong credit rating is a top priority. “While Seattle faces continued economic challenges, I remain committed to making smart policy decisions to maintain our high credit rating,” he said. “I appreciate the Council’s adoption of our 2012 budget proposal to build up our rainy day fund and I look forward to working with them as we close the anticipated $50 million budget deficit for 2013-2014.”
Since 2010, the City has taken a number of proactive steps to improve the City’s financial position. The Mayor, working with the Council, developed a budget plan for 2011 that closed a $67 million General Fund budget gap. The City has closed another $18 million budget gap for the 2012 budget. In both cases this was done without raising general taxes. In addition, the City adopted a more robust set of policies that will better position the City to shore up its Rainy Day Fund. And the City adopted a plan that will turn around the once-underfunded City pension system.
In August, Moody’s Investor Services had placed the City of Seattle on a list of 161 highly rated local governments receiving a “negative outlook” due to their potential exposure to the weakening credit of the federal government.This action followed Moody’s negative outlook on the U.S. government bond rating. A negative outlook means that the bond rating may be downgraded within the next few months. Removing the “the negative outlook” means that the City’s rating will not likely be downgraded due to the weakening of the federal government’s credit.
“The Puget Sound economy is one of the most dynamic in the nation,” said Council Budget Chair Jean Godden. “Home to many large and growing internationally oriented companies, our well-balanced and diversified economy is well-positioned as we move forward.”
Since August, Moody’s has reviewed each of the highly rated local governments on its list to determine if the “negative outlook” should be maintained. In October, Seattle officials discussed the limited significance of the federal government to the local economy and to City revenues. Moody’s has since decided that the City of Seattle’s vulnerability to the federal government’s credit was insufficient to warrant maintaining the “negative outlook.”
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