Moody's upgrades Detroit's credit rating for 2nd time in as many years

More good news for City of Detroit.

"Moody’s measures relative credit risk of financial dealings and Detroit’s rating has improved from year to year. The upgrade follows nine consecutive years of balanced budgets since the city left bankruptcy in December 2014.


Detroit hasn’t owned an investment-grade status since 2009.

Higher ratings mean lower costs for governments when they borrow funds to pay for various investments and upgrades. Those lower costs also translate to resources that instead can be applied to city services that further improve the quality of life in city neighborhoods.


The rating also highlights Detroit’s diversifying economic base and strengthening job growth.

https://wdet.org/2023/04/06/detroit-...-grade-status/

Not quite there yet

Went from B1 to B2

To continue with rating upgrades, the report recommended that Detroit have prudent deployment of the city’s retiree protection fund and sustained absorption of pension contributions, continued revenue growth, and strengthened full value per capita and median household income.


Ratings agencies divide bonds into "investment grade" and "non-investment grade," also called "high-yield bonds," "speculative bonds" or, less kindly, "junk bonds." Bonds rated Baa3 or BBB- and above are considered investment grade.

Bond scores are like a citys credit score ,the higher the rating the cheaper it is to borrow money.

In previous years, Moody’s opined that Detroit needed to demonstrate structural balance. The pending pension cliff in Fiscal Year 2024—when the City will resume contributions to the Legacy Pension Funds—impacted Detroit’s credit rating for a decade. To address that risk and protect retiree pension funding, in 2017 the City established and began building reserves in the Retiree Protection Fund [[RPF). The RPF balance reached $473 million in assets in 2023.

The City will draw on the RPF to offset pension payments beginning in FY2024, successfully easing the “cliff” into a manageable ramp and clearly demonstrating structural balance. Moody’s confirmed the importance of this commitment in commenting that:

“The City’s rating is likely to move upward if... the city is able to continue to make progress in absorbing pension contributions and inflationary cost growth into its budget without adversely impacting its financial operations.”

Its those legacy costs that are coming back to bite you in the butt,but there is something to be said about fiscal responsibility when it comes to voting practices.

You have not only been able to get ahead and not go backwards,you also have been able to squirrel some back for when that 2024 tab hits,that puts you in a heck of alot better shape then some of the other cities you are compared to.

Remember all the cities got a boost when it came to rona virus funds but the stipulation with those is they could not be used for previous pension fund obligations.

A majority of that RPF fund was there before the rona virus hit so if they can meet that pension fund in 2024 you will be over the top and in investment grade.

Sucks for me,I like high risk.