WILMINGTON – The city recently had its bond rating affirmed by Moody’s Investors Services at Aa2 along with an upgrade to a “stable” financial outlook, according to the bond rating agency.
The Aa2 rating is the third highest level awarded by Moody’s, one of the three main rating agencies along with Standard and Poor’s Global Ratings and Fitch Ratings. Improved bond ratings reduce the long-term interest rates held by the city on its debt obligations.
The agency reported Monday that the change in outlook “reflects the recent successful rebound of the city’s financial position from fiscal 2017.”
That year the city council initially voted down the mayor’s budget proposal before approving it on a second attempt. It required a $2 million transfer from the Risk Management Fund in order to offset increasing health care costs.
In the following fiscal year, Mayor Mike Purzycki successfully got council approval on a 7.5% property tax hike in combination with cutting positions. In last year’s budget, he avoided a tax hike and in his FY 2021 proposal is once again not seeking to raise taxes.
Despite the coronavirus-spurred shutdown affecting the city’s revenue streams, the rating analysts believe that Wilmington can stay afloat.
“Despite the city’s economically sensitive revenues, Moody’s expects the city to be able to manage operations and maintain reserves,” wrote Susanne Siebel, lead Northeast regional analyst for Moody’s.
In a statement, Purzycki said that he appreciated Moody’s review, and remained resolved to navigate the city through the health and economic crisis.
“Even with the expected coronavirus-related budget pressures we are facing, Moody’s saw how well we recovered from unanticipated budget expenditures in 2017 and has shown confidence that the same excellence in financial management will get us through the COVID-19 crisis. We are heading into a tough period in a stronger fiscal position, and for that I am very grateful,” he said.
Looking ahead, Moody’s reported that the city could upgrade its rating by maintaining or increasing reserve funds, growing the local economy and/or residents’ income levels, and reducing its long-term financial obligations. Conversely, negative trends in any of those categories could lead to a rating downgrade, Siebel wrote.
By Jacob Owens
