Standard & Poor’s Rating Services announced in February that it raised its long-term and underlying credit rating on Allentown’s general obligation debt three notches from BBB+ to A+.
A news release said the upgrade reflects S&P’s opinion that the city has “significantly improved budget flexibility” as a result of its water and sewer system lease agreement with the Lehigh County Authority.
S&P assigned the A+ rating and a “stable outlook” to two new general obligation bonds that the city issued this month—a $15.6 million issue to pay for new capital improvements and an $11.6 million issue to refinance existing debt.
The ratings agency also said the stable outlook reflects an expectation that the city will maintain a “strong” cash reserve since the administration has indicated it does not intend to spend down Allentown’s available fund balance.
“I am very pleased that Standard & Poor’s has recognized Allentown’s efforts at improving its long-term financial situation,” said Mayor Ed Pawlowski.
“An upgraded credit rating means that investors will find Allentown’s bonds more attractive to buy, which in turn lowers the city’s borrowing costs and the overall debt-related burden on city taxpayers. S&P’s decision also affirms the wisdom in our decision to lease our water and sewer systems to the Lehigh County Authority.”
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