A large chunk of bonded debt carried by the city of Fresno has been upgraded to investment grade in a credit opinion by Moody’s Investor Service.
The upgrade boosts the rating of several lease-backed bonds by two notches, from a speculative level of Ba1 subject to substantial credit risk, to Baaa2, considered medium-grade for investments subject to moderate credit risk. The city’s 2006A Convention Center bonds also were upgraded by Moody’s from a speculative Ba2 level to medium investment-grade Baa3. Pension obligation bonds and judgment obligation bonds issued in 2002 also were upgraded from Ba2 to Ba1, but are still considered speculative for investments.
The bonds carry a combined value of debt of $306 million.
Moody’s also affirmed the city’s rating as a credit issuer as A3, investment grade, with a stable outlook.
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Moody’s cited the city’s position as the Valley’s economic center as a strength considered in the rating upgrades, along with renewed growth of property value assessments starting in 2014, the elimination of deficits and growth of reserves in the city’s budget, and sound management policies. But challenges remain, including an unemployment rate that is higher than state and national levels, and a high poverty rate.