News 5 has learned that Moody's Investors Service, an international credit rating provider, has changed a rating for Bristol, Virginia.
Moody's downgraded Bristol, Virginia's $16.9 million general obligation public improvement refunding bonds from A-1 to A-3, and revised the outlook to negative.
Moody's also downgraded the rating on the city's $54.9 million in outstanding parity debt from AA-2 to A-1.
A3 is the lowest "A" rating possible, but still indicates "above average" credit worthiness.
The Moody's seven page report says this downgrade reflects quote the sizeable difference in the city's debt burden due to the issuance of capital notes to help fund the initial costs associated with the retail-related economic development project known as The Falls. Click here to read the full report in PDF format.
The Moody's report further says this debt limits the city's financial flexibility, which is expected to decline slightly in the 2014 fiscal year. The negative outlook is directly attributed to the level of debt the city is taking on to support The Falls.
However, the report did say the city currently has adequate financial reserves.
We have reached out to bristol Mayor Guy Odum for comment, but were told he was in a meeting when we called.
We are going to continue to look into this issue and bring you more information as it's available.
Jennifer M. Wilson, Public Information Official for the City of Bristol, Virginia released the following statement Friday afternoon:
Rating Revision Will Not Impact Bond Investment Value
BRISTOL, VA - While Moody's announced today a change in rating for the city's impending GO bond restructure, Standard & Poore's rating remained unchanged. While the city maintains an A rating, it is not anticipated Moody's revision will impact the investment value of the bonds.
"As financial advisor to the City, our goal for Bristol was to keep the ratings in the A range. An A range rating is considered "strong" by the national credit rating agencies," said David Rose, Senior Vice President and Manager of Public Finance, Davenport & Company, LLC.
"While Standard & Poore's remained unchanged, Moody's moved the city lower within the same category. Having successfully managed to stay in the A range, we are now estimating that if the overall interest rate market remains stable over the next two weeks, we believe that the all-in interest rate to the city will be lower than previously estimated to City Council," Rose added.
"We are pleased to have an A rating from both rating agencies, which is a strong investment grade rate. Both rating agencies seemed impressed with the efforts underway by staff and City Council to strengthen the city's financial position by improving the economy and establishing more rigorous financial policies," said Andrew Trivette, Bristol, Virginia, Assistant City Manager.
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