Atlanta upgraded to AAA by Fitch

Atlanta’s issuer default rating, general obligation, and guaranteed bonds were raised to AAA by Fitch Rating from AA-plus, based on the implementation of the rater’s updated criteria.

Fitch also upgraded its rating to AAA from AA-plus on the Atlanta Downtown Development Authority, Atlanta Urban Residential Finance Authority, Atlanta Urban Redevelopment Agency and Atlanta Public Safety & Judicial Facilities Authority revenue bonds backed by Atlanta’s full faith and credit and unlimited taxing authority; and lifted the Georgia Municipal Association certificates of participation (city of Atlanta public safety projects) to AA-plus from AA.

The ratings carry stable outlooks.

The city has $1.85 billion of debt, including $600 million of GOs, according to Fitch.

Moody’s Ratings rates the GO and guaranteed bonds Aa1 and the COPs Aa2.

“Under the leadership of Chief Financial Officer Mohammed Balla, the Department of Finance has … accomplished something we should all be proud of,” Atlanta Mayor Andre Dickens said. “These ratings reflect responsible, sound fiscal management and confidence in how we do business in this city. Thanks to the hard work of the DOF and so many others, the city is in the strongest fiscal position in its history.”

In explaining the rating, Fitch cited top-level financial resilience supported by ample budgetary flexibility and expectations that the city will continue to maintain reserves at least equal to 7.5% of spending through most economic cycles.

Budget reserves have been at least 20% of spending since fiscal 2020, Fitch said.

The upgrade is also due to Atlanta’s pattern of greater than average population increases, residents’ high educational attainment, and record of unemployment below the national level.

Balancing against these strengths are what Fitch called a weak long-term liability burden relative to other Fitch-rated local governments. For example, the city’s liabilities to governmental revenue ratio is 227% relative to a national rate of 197%.

The agency cited the city’s revenue volatility as a modest negative. The city’s largest revenue decline since 2005 was 7.2%, higher than the median issuer decline of 4.5%.

Fitch cited the strength and diversity of the city’s economy and its centrality in the region in its decision to notch up the rating.

Fitch’s upgrades reflected its application of its revised local government criteria.

For its part, Moody’s cited essentially the same factors to explain its Aa1 rating on the city’s GOs in an April report.

Fitch also affirmed its rating on the Georgia Municipal Association COPs (city Court of Atlanta project) at A-plus and maintained a positive outlook on the rating.