Fitch And Moody's Reaffirm Bond Ratings For City Of Tuscaloosa

TUSCALOOSA, AL. — Tuscaloosa Mayor Walt Maddox on Tuesday announced the city has maintained its high bond ratings with Fitch Ratings and Moody's Investor Service, as part of the city's latest bond issuance plan.

According to the announcement from the mayor's office, Fitch and Moody's both reaffirmed their ratings of AAA and Aa1, respectively, projecting a stable outlook for the city. The plan was presented and approved by the City Council on Sept. 1 and rating actions were requested from the two firms.

"Fitch and Moody's confirmed what we already knew - the City of Tuscaloosa is resilient, and our staff is dedicated to maintaining the financial stability, strength and responsibility on behalf of the people of Tuscaloosa," Maddox said in a press release.

Maddox also presented the news to the public during Tuesday's regular Pre-Council Briefing, where he provided a detailed visual breakdown to the Council.

"As you can see with Fitch, it's top of the charts, which puts the quality of our bonds at prime," he said as he explained the chart. "And with Moody's, it's the second-highest, which puts us in the high-grade area. For the city of Tuscaloosa to be there ... should make all of us proud."

The mayor also thanked District 7 Councilwoman Sonya McKinstry for her role in the bond hearings with the two firms, in addition to the other city staffers involved.

The Fitch commentary said: "the city's financial profile remains sound and well managed. The city has a long history of maintaining structurally balanced operations, benefiting from conservative budgeting and careful expenditure management."

Fitch Rating’s designations are based on aspects such as revenue framework, expenditure framework, long-term liability burden, and operating performance.

Maddox also said Fitch praised the city's ability to maintain healthy financial flexibility, especially in the midst of the ongoing COVID-19 pandemic. What's more, the firm reportedly took notice of the city's approach to "addressing revenue pressures due to the current downturn."

The mayor then pointed out that Moody's noted the city's conservative budgeting and adequate reserves maintained during the COVID-19 pandemic for its ratings.

The Moody's credit opinion states: "Fiscal 2020 operations are expected to end strong, however the fiscal 2021 budget is projecting a decline caused by reduced sales taxes due to the pandemic. Positively, the city's financial management team is very active in its operations and reserves will remain in compliance with its policies."

When asked by District 4 Councilman Lee Busby about the possibility of seeking an Standard & Poor's (S&P) rating in the future, Maddox said the city opted to go with Moody's and Fitch for this bond issuance, but would eventually like to return to an "S&P dialogue."

"Especially since the improvements we’ve made with the police and fire pension fund," Maddox pointed out before the Council. "Hopefully, by the time that rolls around again, we will not only have the built-in improvements done through the Alabama Legislature, but the recommendations from the task force, as well."

The city also provided online links to the credit opinions that can be viewed in their entirety on FitchRatings.com and Moodys.com.