Moody’s Investors Services upgraded its rating for the city of San Diego’s outstanding lease revenue bonds from A2 to A1, with a stable outlook.
In its report, Moody’s said the upgrade reflects the city’s improved financial position, marked by growing cash reserves, a growing economy with sound long term prospects, stronger financial policies, and the city’s continued commitment to addressing its pension liabilities.
The city’s debt burden is low and composed solely of fixed rate debt, Moody’s said.
While the upgrade to nearly $300 million in outstanding lease revenue debt is welcome, the rating is still four notches below Moody’s highest rating of Aaa.
Because of the upgrade, the city should be able to obtain a lower interest rate when it issues about $120 million in new revenue bonds for a variety of infrastructure improvements.
The city approved those bonds in January but because of legal challenge, it was unable to issue the debt. Earlier this month, a San Diego Superior Court judge ruled that a public vote was not necessary before the bonds could be issued.
San Diego and many other cities in California have used lease revenue financing for many years. The city issued lease revenue bonds to expand Qualcomm Stadium and build Petco Park.
City Council President Todd Gloria said, “The upgrade demonstrates the improved financial strength of the city of San Diego that is the result of implemented reforms and continued fiscal discipline.”