New London — Fitch Ratings upgraded New London’s bond rating from A+ to AA- on Friday and announced the city’s rating outlook has been revised from positive to stable.
Fitch, along with Moody’s and Standard & Poor’s, is one of the major credit rating agencies known as the “big three.” Fitch assigns long-term credit ratings on an alphabetic scale beginning with AAA as the highest and scaling to D as the lowest, with =/- modifiers in between.
According to Fitch Ratings’ report, the one-notch rating upgrade for the city’s Issuer Default Rating (IDR) and general obligation (GO) bonds “is driven by a combination of the city’s strengthened budget management practices leading to improved liquidity levels along with a notable increase in the city’s tax base during the most recent revaluation. Fitch believes these factors better position the city to manage through a future economic downturn.”
Fitch’s report “examined a number of key rating drivers, including revenue and expenditure frameworks, long-term liability burdens and operating performance,” according to a release. “In each category, New London demonstrated growth and improvement related to better real-estate appreciation and new construction that would add to the City tax base. In addition, improved budgetary controls and policy changes have supported sound operating results over that past six financial years, and have restored budget reserves to solid levels.”
The report is another confirmation of New London’s healthy financial condition and continued growth, said New London Director of Finance, David McBride, in a release. “Our city is fulfilling the promise of being a place where people want to live, work and invest. This upgrade to our bond rating will only propel that growth.”
The report also found that “New London has an improved ability to withstand future economic downturns and that the administration has demonstrated a commitment to improving the city’s financial flexibility,” according to a release.
“Our city has been growing at a remarkable rate. We were one of the only cities to see our mill rate drop in 2019, bringing relief to our taxpayers without cutting city services and creating an economic outlook that is the most positive in generations,” said Mayor Michael Passero, in a release. “New London’s time is now, we will continue to draw new businesses and new investments to our city to support the economic future of our community.”