Moody’s gives city top debt rating

Moody’s Investors Service Monday announced it has given its highest debt rating — "Aaa" — to Evanston’s new and existing bond debt.

And the agency labels the city’s future financial outlook as "stable."

Moody’s Investors Service Monday announced it has given its highest debt rating — "Aaa" — to Evanston’s new and existing bond debt.

And the agency labels the city’s future financial outlook as "stable."

Moody’s had downgraded the city’s rating by one notch, to "Aa1" back in 2007 as concerns grew about the city’s increasing pension liabilities and overall spending levels.

The firm Monday said it had "recalibrated" the city’s existing debt rating to "Aaa" on April 16, a move that was not widely reported at the time.

The "Aaa" rating applies to $14.5 million of new general obligation bonds to be issued this year as well as existing debt of $151.5 million.

Of the new debt, $6.5 million will be used to finance capital improvement projects and $8 million will finance a payment to the Illinois Municipal Retirment Fund to cover early retirement benefits for city employees.

Moody’s described Evanston as a "mature, affluent community" and said Northwestern University and the city’s two hospitals help provide a secure economic outlook for the city, despite their tax-exempt status.

It praised the city’s efforts to deal with declining revenue during the recession by laying off employees and limiting other expenses to reduce costs.

While noting that the city’s unfunded public safety pension liabilities continue to grow, the report says that risk is balanced by the city’s "unlimited ability to raise revenues" as a home rule community.

It says the city’s overall debt level is "slightly above" state and national medians, but is expected to remain manageable "with a sound amortization rate and moderate future borrowing plans."

The Moody’s announcement follows a report last week by Fitch Ratings that affirmed that agency’s top-level rating for Evanston’s municipal debt.

Update 8/6/10:

Things are heading in the other direction for the City of Chicago. Chicago Business reports that Moody’s has cut the City of Chicago’s bond rating to Aa3, it’s fourth highest investment grade, from Aa2. Fitch Ratings issued a similar downgrade on Chicago’s debt Thursday.
 

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