CONTACT: Laura E. Mayes, 210-207-1337
Spanish media: Carlos Valenzuela, 210-207-3919
SAN ANTONIO (June 25, 2020) – The City of San Antonio’s excellent general obligation bond ratings have been reaffirmed by all three major credit rating agencies, Standard & Poors, Fitch and Moody’s, each of which also issued a “stable” outlook, a significant vote of confidence for the City of San Antonio in light of the economic impacts of COVID-19 on tax revenues for all local governments. The City’s credit ratings, which determine the amount of interest that taxpayers pay for voter-approved debt to build capital projects in San Antonio, are as follows:
“The City of San Antonio took swift action in April to address a $200 million revenue shortfall caused by the pandemic, and it appears that the credit rating agencies took notice,” said City Manager Erik Walsh. “For our City to maintain its excellent ratings and receive an improved financial outlook in the midst of a global pandemic speaks volumes to the financial management of the City staff and the decisive policy decisions made by the City Council. “
While the strong credit ratings were maintained, the stable outlook awarded by the ratings agencies was an improvement. In March and April 2020 respectively, Fitch and S&P had placed all State and Local Government sectors, which include the City of San Antonio, on negative outlook as a result of the impact to the economy of COVID-19 closures and restrictions. The change from stable to negative outlook at the time did not constitute a rating downgrade, but it recognized that certain sectors are more vulnerable to negative rating action based on the current economic situation. By awarding a stable outlook, the rating agencies effectively gave the City of San Antonio a vote of confidence that the City is successfully mitigating the financial impacts of the COVID-19 public health crisis.
“These strong ratings from all three agencies in the middle of the COVID-19 pandemic demonstrate the strong fiscal stewardship implemented by City Council, City Manager Erik Walsh and his leadership team,” said Mayor Ron Nirenberg. “Erik and his budget team have responded to today’s difficult economic challenges adeptly with a laser focus on the strong management that preserves the most services possible. These ratings show the prudence of these moves.”
“I’m tremendously proud of this organization, and I also recognize that the decisions we make going forward to close the $109 million shortfall over the next years will be watched just as closely by the rating agencies,” added Walsh.
Statements from the rating agencies in their reports include:
“Stable operating results have led to the maintenance of a very strong reserve position, providing the city’s management team with significant flexibility to mitigate the revenue declines resulting from the COVID-19 driven recession,” said S&P. “We anticipate that the city will be able to maintain its fiscal position given its very strong and established financial policies and practices.”
“The city’s finances are stable, guided by an adept management team with a culture of conservative budgeting practices and careful expense management,” said Moody’s.
Fitch cited “a combination of revenue flexibility, minimal expected revenue volatility during moderate economic downturns, moderate carrying costs, and large reserves leaves (the City) well positioned to address both the current pandemic-induced economic contraction as well as future cyclical downturns.” Fitch added that, “the city has demonstrated a commitment to prudent fiscal practices.”
The City met virtually with the three major rating agencies, Moody’s Investors Services (Moody’s), Standard & Poor’s (S&P) and Fitch Ratings (Fitch), on May 29th and June 2, 2020 in anticipation of the City’s sale of General Obligation Refunding Bonds scheduled for June 30, 2020. The bond sale includes the refinancing of some of the City’s outstanding property tax supported bonds for significant interest cost savings.
During the meetings with the rating agencies, the City provided an update on major issues since meeting with them last year with much of the discussion focused on the impact of COVID-19 and the City’s proactive efforts to mitigate its impact on our community and the City’s operations and services. It also focused on the projected financial impacts on the City’s budget and financial position as well as the steps taken to address these financial challenges.