LITTLE ROCK, Ark. (March 21, 2017) – The City of Little Rock announced on Tuesday a bond rating upgrade that lauds the municipality’s solid financial health, City Manager Bruce Moore said. 

The City’s various bond issues are usually rated by Standard & Poors (S&P) or Moody’s Investor Service or both. In February, Moody’s upgraded the City of Little Rock’s General Obligation Limited Tax Bonds to Aa1 from Aa2. The Aa1 rating is one step below the prime Aaa rating, said Finance Director Sara Lenehan.

A debt or credit rating is a financial indicator to potential investors of debt securities such as bonds. Both S&P and Moody’s utilize letter designations to represent the quality of a bond. S&P ratings range from AAA – D, with AAA indicating a prime rating and D indicating that the bond is in default. Moody’s ratings range from Aaa – C, with Aaa indicating a prime rating and C indicating default. 

For several years, S&P and Moody’s have rated the City’s general obligation debt at AA and Aa2, respectively, indicating that the debt is “high grade.” This rating indicates that the City has very strong capacity to meet its financial commitments. 

“During the economic downturn from 2009 to 2014, the City was very pleased to maintain the AA and Aa2 ratings, when many other municipalities experienced rating downgrades due to reduced property values and other negative financial trends,” Moore said. “Increased debt ratings lower interest rates, reduce the cost of debt issuance, and attract a broader market of potential investors.”

The rating upgrade applies to the outstanding 2012 Library Capital Improvement Bonds and the 2013 Capital Improvement Bonds for Streets and Drainage. S&P and Moody’s review the City’s existing general obligation debt ratings on an annual basis or when a rating is requested on a new debt issuance.

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