Three leading N.Y. firms declare city fiscally fit

Baltimore gets all A's from raters for $40 million general obligation issue


June 18, 1999|By Ivan Penn | Ivan Penn,SUN STAFF

The report card on Baltimore's fiscal fitness is out, and the city once again received all A's from three leading New York firms that rate municipal bonds.

The high marks for the city's bond rating came as Baltimore issued $40 million in general obligation bonds. The ratings are required in order for the city to issue the bonds, which went on sale Tuesday.

Moody's Investors Service gave the city an A1, a rating Baltimore has received since 1976. In addition, Fitch IBCA rated the city A+, while Standard and Poor's Rating Group gave Baltimore an A, which it has done since 1987.

The highest ratings issued by the services are the "Triple-A" issues, which are regarded as bonds that are all but risk-free. Strong ratings are important, because low marks can add millions of dollars in interest costs to a city's bonds.

The ratings companies praised the city's development efforts and steps to strengthen Baltimore's tax base.

"New construction, redevelopment efforts and incentives offered to prospective residents have held the tax base steady," Standard and Poor's wrote in its report on the city.

"Tourism continues to be a strong draw to the city, with the popularity of the Inner Harbor and new sports stadiums."

Fitch added that the city continues to reduce its work force, to identify new revenue streams and to seek more state money as ways to relieve fiscal pressures. "And it has done so fairly successfully to date," it said.

But Fitch did state in its findings that some problems remain that hinder the city from reaching its economic potential.

"Some parts of the city lag, suffering from long-term population losses that have contributed to stagnant, major revenue sources," Fitch stated.

The city has lost 300,000 residents over the past three decades, but has maintained fiscal soundness to keep its bond rating high.

Mayor Kurt L. Schmoke welcomed the bond-rating news, which has been a hallmark of his administration.

"Many other cities, particularly East Coast cities, have gone through significant financial problems," Schmoke said.

"We've been able to navigate our way through."

Pub Date: 6/18/99

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