Fitch affirms favorable rating for Chattanooga's bond issue

Fitch affirms favorable rating for Chattanooga's bond issue

November 9th, 2013 by Dave Flessner in Business Around the Region

Chattanooga tile

Photo by Tim Barber /Times Free Press.

Chattanooga will head to Wall Street next month to borrow $31.3 million for capital projects, boosted by a favorable assessment of the Scenic City from a top bond rating agency.

Fitch Ratings this week affirmed Chattanooga's AA+ rating, the second highest rating possible for such municipal bonds. The only higher rating possible from Fitch, AAA, is enjoyed by few municipalities. Hamilton County boasts the AAA rating from Fitch, however.

The city plans to price $31.3 million in general obligation bonds on Dec. 3 to help fund general and water quality capital projects.

In her bond rating for Chattanooga, Fitch analyst Barbara Ruth Rosenberg said Chattanooga's moderate debt and diverse economy make the city a good bet for lenders. The city has a per capita debt of $2,899 and ended last year with a $12.7 million surplus, equal to 5.8 percent of the city's total spending.

"Expenditure reductions coupled with historically conservative budgeting and a willingness to raise revenues have enabled the city to maintain sound reserves and financial cushion," Rosenberg said.

But the Fitch analyst said Chattanooga's city jobless rate of 9.2 percent in August was well above the U.S. rate and was actually up from a year ago despite a nationwide drop in the jobless rate. Chattanooga's poverty rate also was higher and per capita income lower than the U.S. as a whole.

Nonetheless, Fitch also affirmed a top AA+ rating for Chattanooga's outstanding $171.7 million of general obligation bonds, which carry the full faith and credit of the city.

Mayor Andy Berke said the Fitch ratings "affirms the city of Chattanooga's strong fiscal health.

"We work hard to provide the most effective, efficient services at the best value to taxpayers and this high rating is a result of our efforts," he said in a statement.

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