In mid-March, Mayor Shirley Franklin visited three municipal credit rating agencies, Moody’s Investors Service, Standard & Poor's, and Fitch Ratings, in New York to inform them first hand of the tough economic issues facing the city.
The city’s need to borrow funds for operating purposes through the issuance of Tax Anticipation Notes (TANs) has necessitated each of the rating agencies to perform an updated analysis of Atlanta’s credit worthiness. All of the rating agencies have given the city’s TAN issue their highest rating. While the companies have praised the administration for the major initiatives that have been put in place to address the 82 million dollar deficit, the severe depletion of General Fund cash and equity combined with a continuing sluggish economy, has forced each agency to revise their ratings of the city.
Moody’s Investors Service re-affirmed the city’s Aa3 general obligation bond rating, but revised their outlook from stable to negative, citing the severe depletion of General Fund cash and equity.
Standard & Poor's has given the city’s TAN their highest rating, SP-1+. It has, however, lowered the city’s general obligation bond rating from AA to AA-, reflecting concern over a weakened financial position overall.
Fitch Rating has given the city’s TAN and F1+ rating, their highest, and has not changed their rating on city general obligation debt.
“While we find ourselves in this difficult situation, we are confident we have put the right mechanisms and turnaround strategy plan in place to rectify the downgrade. From day one we have made tough decisions and expressed our belief that financial stability and integrity in all fiscal matters are the cornerstones of financial successful city,” says Mayor Franklin.
Interim Chief Financial Officer Rick Anderson stated, “We are disappointed that the rating agencies felt compelled to lower their assessments of Atlanta’s near-term financial outlook, but certainly understand and appreciate their reasons for doing so. We are encouraged, however, by their high rating for our TAN issue, and by their positive reception of the actions we are taking to restore financial stability”.
The outpouring of in-kind support and professional contributions from Bain & Company, Deloitte & Touche, Deloitte Consulting, United Parcel Service, Fulton County Daily Report, Paul Hastings Janofsky & Walker LLP, Spencer Stuart, Heidrick and Struggles, Ray & Berndtson, Russell Reynolds, Sutherland Asbill & Bennan LLP, Strategy Dot Gov LLC, and Greater Atlanta Chamber Foundation have helped to guide us through the process. This coupled with the support of our citizen’s leaves us assured that we can right the ship and restore confidence in the financial capability of the city.