MANSFIELD — Moody’s Investors Service has reaffirmed the City of Mansfield’s A2 credit rating and removed the “negative outlook” assigned to the city’s financial picture in September 2020.
Finance Director Linn Steward said the affirmed rating and now removal of the “negative outlook” could result in the city paying lower interest rates with future bond issuances and borrowing.
“The A2 issuer rating reflects the city’s healthy fund balance and liquidity and moderately-sized tax base, but below average property wealth and resident incomes and economic concentration in manufacturing,” Moody’s said in a press release Monday.
“Additionally considered in the rating is the city’s above average debt burden and elevated pension burden stemming from its participation in two underfunded cost sharing pension plans,” the investors service said.
“The removal of the negative outlook reflects the city’s plan to steadily reduce the debt burden and (local) steady employment leading to health income tax collections in 2021,” Moody’s said.
The A2 rating is the sixth-best on Moody’s scale, behind Aaa, Aa1, Aa2, Aa3 and A1.
Steward said the city’s rating was upgraded to A2 from A3 in March 2016. It was upgraded to A3 in May 2015 from “Baal,” a move that reflected the city’s financial turnaround from a state-ordered fiscal emergency in 2010.
According to Moody’s, “Obligations rated Baa are subject to moderate credit risk. They are considered medium-grade and as such may possess speculative characteristics.”
Moody’s long-term obligation ratings are opinions of the relative risk of fixed-income obligations with an original maturity of one year or more.
“They address the possibility that a financial obligation will not be honored as promised,” the company said. “Such ratings reflect both the likelihood of default and any financial loss suffered in the event of such default.”
Entities with an “A” rating are considered “upper-medium-grade” and subject to low credit risk, according to Moody’s ratings system.
