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Philly gets a credit upgrade - still, only Detroit has a worse rating
The city's credit got bumped up from BBB to BBB+. Should you care?
Philly gets a credit upgrade — still, only Detroit has a worse rating
Standard & Poor's boosted Philly's credit rating from BBB with a flat outlook to BBB+ with a positive outlook today. Should you care?
Councilman Curtis Jones was pretty ecstatic at today's budget hearing. And City Treasurer Nancy Winkler said that "plus" makes a difference: having even one low credit rating is pretty bad for city finances. Philly has an A2 rating from Moody's and an A- from Fitch, the other two major rating agencies. A lower rating indicates higher risk.
"Investors typically want to receive an interest rate on the bonds they own commensurate with the lowest rating that’s out there. So for us the gap between the Moody's A2 and the BBB flat was costly to us.... It should be [worth] millions of dollars to the city and all of its borrowers if we could get into the A category," she said. She said that, while credit ratings used to be not such a big deal, "since the credit crisis investors are drawing very major distinctions [between ratings] and demanding much higher rates."
Also interesting: the amount of selling and schmoozing that apparently went into getting that higher rating, including tours of the Navy Yard, a sales pitch from Comcast execs, and a PowerPoint from Deputy Mayor Alan Greenberger that was so big it would have to be passed on to Council via flash drive.
Now the bad news: the only big city that has a worse credit rating than Philly is Detroit, though some smaller cities fare worse.
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