The City of Chattanooga received a bond rating of AAA, earlier this month — the highest possible rating by Fitch Ratings and Standard & Poor’s (S&P). Chattanooga had not recieved AAA rating from Fitch since 2007, although the city was already rated as AAA by S&P.
Agencies cited the capital and operating budgets in Mayor Tim Kelly’s recent budget bill as a key factor driving the high credit rating, along with the city’s strong fiscal management through COVID-19 and the local economy’s continued growth.
“As we look to make once-in-a-generation investments in Chattanooga’s infrastructure, this affirmation of our fiscal resilience means we’re well positioned to build a stronger community at a lower cost to taxpayers,” said Kelly. “The financial sector’s confidence in our budget and economy will better position us to improve our streets, mass transit system, water and sewer infrastructure, parks and outdoor spaces, as well as critical public services — which together can unlock Chattanooga’s true potential.”
Fitch also attributed the credit rating to local initiatives impacting Chattanooga’s economy, including Volkswagen’s decision to manufacture electric vehicles, the establishment of a downtown innovation district, residential and commercial growth, and an increase in high-tech employers.
On Nov. 16, the City of Chattanooga sold $40.6 million of bonds with an interest rate of 0.744570%, Yahoo News reports.
Designated as Series 2021A and Series 2021B bonds, the 10-year notes attracted nine competitive bids resulting in $15.1 million in new general obligation (GO) bonds and $25.5 million in refunded GO bonds.
Officials project the new bonds will yield a net present value savings of more than $2.5 million for the city — adding that Chattanooga’s economy is expected to outperform the U.S. economy for another year.
“This bond rating improves the city’s competitiveness in economic development. The city’s ability to borrow at rates this low allows for substantially better financial positioning and increases opportunities for more successful investments in infrastructure that will make the community more appealing for private investments and drive increased municipal revenues long into the future,” said Charles Wood, Vice President, Economic Development, Chattanooga Area Chamber of Commerce.