Moody’s upgrades Long Beach’s bond rating

Agency says city’s financial position ‘improved but still narrow’

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Four years after officials said that the city was on the verge of bankruptcy, Moody’s Investors Service upgraded Long Beach’s bond rating another notch last week and gave the city a positive outlook, citing improved financial controls and a replenished reserve fund.

On Jan. 29, Moody’s upgraded the rating on the city’s $66 million in outstanding general obligation debt from baa2 to baa1, and has given it a positive outlook on future bond upgrades.

Moody’s said that the baa1 rating reflects the city’s “improved but still narrow financial position” following the issuance of deficit reduction bonds in fiscal 2014, but added that another upgrade could happen in a year if the city continues to pass balanced budgets and maintain its reserve fund.

The agency’s announcement last week came a year after it last upgraded the city’s rating to baa2 from baa3.

“This City Council is thrilled to see yet another bond upgrade, along with a positive ratings outlook,” City Councilman Scott Mandel said. “Having been part of this administration from the beginning, it is extremely rewarding to see our tough choices and positive improvements recognized and the city rewarded for them. Reversing years of the previous administration’s mismanagement has been no easy task, but we are proud to have again been acknowledged for our efforts.” 

In 2013, Moody’s revised Long Beach’s credit rating outlook from negative to stable, which prompted the city to lift its declaration of a fiscal crisis, issued in February 2012, after it uncovered a multi-million-dollar deficit inherited from the previous administration. Two months earlier, the rating had been downgraded an unprecedented five levels, from A1 to Baa3, just one step above junk bond status, which the agency said reflected the city’s deteriorating financial position since 2008 and its depletion of reserves.

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