FOR IMMEDIATE RELEASE: Oct. 4, 2004
City receives “stable outlook” ratings from Wall Street
Moody’s Investor Services, Standard and Poor’s, and Fitch issued “stable outlook” credit ratings to the Kansas City Municipal Assistance Corporations’ $73.4 million of leasehold improvement revenue bonds. The bonds were sold Sept. 28.
The proceeds from the bond sale will be used to finance a portion of the Bartle Hall Convention Center expansion, the construction of a new municipal tow lot facility, and the Prospect North Phase II Project.
Moody’s Investors Service assigned an “A2” rating with a “stable outlook” to the bonds. The “A2” rating reflects satisfactory legal provisions contained within the underlying documentation, the non-essential nature of the project, and the strength of the City’s appropriation pledge as a highly rated entity.
Moody's believes that despite the recent effects of the sluggish economy, including weakness in sales and income tax collections, Kansas City’s increasingly diverse employment base, land available for development, and expected downtown redevelopment will lead to long-term growth in the City’s property, sales and income tax bases.
Moody’s expects the City’s sound financial position to improve over the long term due primarily to improving economic conditions which should translate into increases in the City’s primary revenue resources in the coming years, with healthy liquidity providing a cushion if the recovery is not as quick as projected.
Standard and Poor’s outlook on the bonds is “stable.” The “AA-” rating reflects the City’s pledge to pay debt service, subject to annual appropriation, and is based on the expectation that the City will maintain at least balanced financial operations as its population and tax base continue to grow.
The rating from Fitch on the bond sale is “AA.” The rating reflects the strength of lease payments from the City which are subject to annual appropriation.
Among the City’s strengths, Fitch cites: the area’s diversified economy; strengthening financial performance due to broad-based tax structure and careful management of discretionary spending; and heightened efforts to address public infrastructure needs without reliance on tax-supported debt.
The credit ratings for this Kansas City Municipal Assistance Corporation bond issue, while ultimately backed by the City, are discrete and therefore reflect the additional risk of non-appropriation. Therefore, Moody’s Investor Services, Standard & Poor’s and Fitch generally rate these bonds one notch below the City’s recently affirmed general obligation bond ratings of Aa3, AA and AAA, respectively.