Contact: Thea Setterbo, 210-207-7349
Spanish media: Carlos Valenzuela, 210-207-3919
SAN ANTONIO (July 27, 2018) – For the ninth consecutive year, the City of San Antonio has achieved a ‘AAA’ general obligation bond rating by all three major bond rating agencies – Standard & Poor’s, Fitch and Moody’s. San Antonio remains the only major city with a population of more than one million to have a ‘AAA’ bond rating from any one of the major rating agencies.
“I’m extremely proud of this accomplishment, especially in the face of so many external challenges— pressure from the state legislature to cap our revenues, the uncertainty of potential union-driven charter amendments and an unresolved collective bargaining agreement with the fire union,” City Manager Sheryl Sculley said. “To have done this again and again is a testament to our City team’s commitment to the community and San Antonio’s financial security.”
The ‘AAA’ bond rating allows the City to pay the lowest-possible interest rates when borrowing funds, which means more dollars available for street construction, sidewalks and drainage improvements.
“Achieving the ‘AAA’ bond rating for the ninth time demonstrates our exemplary fiscal discipline,” Mayor Ron Nirenberg said. “The City Manager and her finance staff have worked diligently with City Council to continue our legacy of fiscal stewardship. The end result saves millions of tax dollars and allows us to provide more direct services in a cost-effective manner. Unfortunately, the fire union’s proposed charter amendments could put our bond rating in jeopardy.”
Taking immediate advantage of the highest-possible credit rating, the City is selling $330.425 million in bonds, certificates of obligations and tax notes next week. The sale includes $156.015 million in bonds, which is the second issuance of the voter-approved 2017-2022 Bond Program.
Below are some of the comments from the rating agencies’ reports:
According to Fitch, among the factors contributing to San Antonio’s ‘AAA’ bond rating are the “City’s strong revenue flexibility and growth prospects, minimal revenue volatility and superior financial resilience.”
Fitch noted the petitions proposed by the fire union “have the potential to greatly limit the city's revenue and expenditure flexibility and interfere with management's ability to operate the city.”
“Successful passage of these petitions, particularly those that make any ordinance subject to referendum and allow the firefighters to require binding arbitration, would lead to negative rating pressure should the city be unable to effectuate effective responses.”
Standard & Poor’s
Standard & Poor’s notes the City’s “very strong management with strong financial policies and practices” in their assessment of the ‘AAA’ bond rating.
S&P states that “if voters approve the proposed changes to the city's charter in the upcoming November 2018 election, we believe the changes to the referendum process in particular could have a material negative impact on the city's finances, as such initiatives could effectively limit San Antonio's ability to manage its budget.”
Moody’s cites “a growing and vibrant economy, anchored by dynamic sectors that have spurred stable employment trends” and “a solid financial profile that benefits from steady operating performance and significant revenue-raising flexibility.”
Moody’s specifically noted that “the city demonstrates good governance guided by an experienced team. The city's fiscal practices include multiyear budgeting, and five year financial forecasting, with the capital planning going out further.”
The full reports from all three rating agencies can be viewed here: https://www.sanantonio.gov/Portals/0/Files/Finance/off-statements/2018Obligations-RatingAgencyReports.pdf