Pittsburgh, Pennsylvania’s second-most populous city, had its general credit-rating raised three steps to A by Standard & Poor’s, which cited a restored structural balance in operations and rising reserve funds.
The new grade is S&P’s sixth-highest level and matches the city’s score from Fitch Ratings. Moody’s Investors Service ranks the city A1, one step higher.
“The city has demonstrated a proven ability to maintain an enhanced credit profile featuring improved financial management and planning, consistently favorable budget performance, and strong reserves and liquidity,” Andrew Teras, an S&P credit analyst in Boston, said in a statement.
Teras also cited the involvement of the Intergovernmental Cooperation Agency, a state oversight board formed in 2004, and the city’s coordinator under Pennsylvania’s Act 47 program, which aids financially distressed municipalities. He said Pittsburgh has favorable long-term prospects because of a deep and diverse economy.
Once known as America’s Steel City, Pittsburgh has moved away from its Rustbelt heritage by expanding schools, universities and hospitals to replace mills and foundries.
The state oversight board, which approves the city’s budget and five-year financial plan, said in an April report there’s been “good progress” and the community is no longer at the brink of bankruptcy, where it was in 2003.
Still, Pittsburgh “continues to face many significant financial challenges,” such as debt consuming 19 percent of its budget, and a “dangerously underfunded” pension system, according to the overseer’s report. In addition, it said revelations of hidden police department accounts and credit cards underscore the need for a financial-management system to prevent abuse.
Mayor Luke Ravenstahl, 33, abruptly ended a re-election campaign in March and said he would leave office by year-end, citing the pressures of the job and a federal corruption probe of the police department. Marissa Doyle, his spokeswoman, didn’t immediately respond to telephone calls and an e-mail seeking comment on the rating upgrade.
A Pittsburgh bond maturing in September 2018 traded yesterday at an average yield of 2.76 percent, 1.07 percentage points over benchmark debt of the same maturity, according to data compiled by Bloomberg.
© Copyright 2016 Bloomberg News. All rights reserved.