FOR IMMEDIATE RELEASE: Feb. 1, 2007
Credit rating agencies affirm City's bond ratings
Moody's Investors Services, Standard & Poor's, and Fitch have confirmed their credit ratings for $47.2 million of infrastructure facilities refunding bonds for sale Feb. 21 by the Kansas City Industrial Development Authority.
"The ratings are a testament to the work the elected officials and City employees have given to raising the profile of our city and making bold decisions to ensure a stronger economic future," Mayor Kay Barnes said.
The proceeds from the sale of the bonds will be used to refund bonds originally issued for redevelopment projects for the Midtown Marketplace and the Uptown Theater, which were originally issued by the Missouri Development Finance Board. JP Morgan is the leading underwriter for the bond sale. The bonds are secured by pledged revenues and will be issued by the Kansas City Industrial Development Authority. They ultimately are secured by the City's annual appropriation pledge.
"The proceeds from the sale of the bonds also will allow us to save on debt service payments for the bonds, which will further improve our economic position," said City Manager Wayne A. Cauthen. Present value savings of $2.1 million are expected. That represents 4.5 percent of the refunded par value.
Moody's Investors Services assigned an "A2" rating for the $47.2 million of Series 2007A bonds, and affirmed the "Aa3" rating for the City's $224.3 million of outstanding general obligation unlimited tax debt. The A2 rating for the bonds reflects the pledge of project-related revenue streams, the appropriation risk for the City, and the overall legal structure, which includes a security interest in a revenue stream but not the fixed assets. The Aa3 rating for the general obligation debt reflects the City's role as the economic hub of a larger metropolitan region, its improving financial position and its above average debt position.
Moody's believes that despite the recent effects of the sluggish economy, Kansas City's increasingly diverse employment base, significant amounts of land available for development, and continued downtown revitalization and redevelopment will lead to long-term growth in the City's property, sales and income tax bases.
Standard & Poor's rating on the 2007A bonds is "AA-" with a "stable" outlook. The AA- rating reflects the City's pledge to pay debt service, subject to annual appropriation and pursuant to a financing agreement between the City and the Kansas City Industrial Development Authority. Standard & Poor's also affirmed the "AA" rating on the general obligation bonds. These ratings reflect the City's position as the "regional center of a strong and diverse economic base."
Fitch has assigned a rating of "AA" to the 2007A bonds. Fitch also affirmed its "AAA" rating on the City's general obligation debt, and its "AA" rating on $551 million of Kansas City Industrial Development Authority parity debt. The overall credit rating outlook is "stable."
The AA rating for the 2007A bonds is based on the strength of pledged revenues and available general municipal revenues. The AAA rating on the City's general obligation debt, the highest on Fitch's scale, is based on the City's diverse economic and tax revenue structure.
According to Fitch, the City has achieved its financial strength through diligent management practices as it endeavored to respond to neighborhood public infrastructure needs and downtown revitalization. Increased internal funding of capital projects has limited the growth of tax-supported debt, which has increased in recent years. Labor relations are strong and future personnel costs are expected to be within normal budget constraints. Although a weaker economy has forced the City administration to significantly reduce budgetary spending and personnel levels, the City's financial position has stabilized and is improving.