CITY’S CREDIT RATING RECEIVES FIRST ‘NEGATIVE OUTLOOK’ AFTER YEARS OF CREDIT UPGRADES

Mayor Luke Ravenstahl today announced that the City received an updatedA1 bond rating from Moody’s Investor Services. The A1 rating is no change from last year’s, but for the first time since the Mayor took office, an international rating agency gave the City a “negative outlook.” Up until now, the forecasted financial outlooks from all three international rating agencies – Moody’s, Standard and Poor, and Fitch – have been upgraded to “stable” under the Mayor’s leadership, citing strong fiscal management and healthy fund balances. In assigning the negative outlook, Moody’s indicated concerns regarding the anticipated increased pension payments under state Act 44.

“Today, one of the world’s leading credit rating agencies raised the red-flag on Pittsburgh’s financial future,” Ravenstahl said. “This shouldn’t be a surprise, after Council chose to vote down the only real solution that addressed our pension crisis. It’s unfortunate that four years of bond rating upgrades have ceased, when we had the opportunity to greatly improve our City’s financial health and show the world that Pittsburgh is the best place in which to invest.”

According to Moody’s, the A1 rating indicates the City’s “stable financial performance over the past five years, reflecting a strong management team that has produced operating surpluses in four of the last five years.” In practical terms, the negative outlook may affect the City in the future with increased bond interest rates. Moody’s cited that the negative outlook could be removed, should the City execute a solution to avoid unsustainable pension payments.

In 2006, the City’s bond rating was upgraded by Moody’s for the first time in years, and the City has subsequently received three morebond rating upgrades. Moody’s upgraded the City’s credit rating two times since the Mayor took office, from Baa2 to Baa1, to A1. Last week, Fitch maintained the City’s “A” bond rating and Standard and Poor is expected to release their rating in the coming weeks.