Feb. 23—Although the coronavirus pandemic has taken a toll on city finances, two bond rating companies have kept the city's credit rating at AA- as Pittsburgh is set to float a $55 million bond for capital projects next month.
"As the ratings agencies noted, the city's strong fiscal oversight the past several years helped build up a fund balance that carried us through the covid-19 crisis," said Tim McNulty, spokesman for Mayor Bill Peduto.
AAA is the best rating and D is junk bond status. In 2004, at the depths of the fiscal crisis, the city had a D rating. The rating has steadily improved with its financial position.
The agencies, Fitch and S&P Global Ratings, noted how the city's financial position was able to withstand the economic fallout of the pandemic.
S&P said Pittsburgh's outlook was "stable," although the city faces a $120 million deficit in July if federal aid isn't approved.
"It is now imperative that Congress provide relief to Pittsburgh and other cities fighting the past year on the front lines of the pandemic, which will help them rebuild their reserves," McNulty said.
In contrast to S&P, Fitch gave the city a "negative" outlook because of the pandemic.
"The outbreak of coronavirus and related government containment measures worldwide has created an uncertain global environment for U.S. state and local governments and related entities," Fitch wrote in its report.
But the report also indicated that Fitch projects the city can withstand the fiscal stresses of the pandemic.
The rating represent a slight downgrade from 2020, when the city was rated as "positive" by Fitch.
In 2019 it was rated "stable," which was was an improvement in the city's status as its finances have recovered since 2004, when it entered the state's Act 47 program to avoid bankruptcy. It was released from Act 47 in 2018. The city had a $120 million reserve fund in 2020 that helped it weather the pandemic without making job or service cuts.
The expected interest rate when the bonds are issued in March will be slightly less than the 2.5% rate for the city's 2020 bond issue of about $50 million, city Finance Director Douglas Anderson told council in January.
The city is also working to structure repayment of the debt so it will be about $2.7 million each year through 2027, when it will jump to $5.3 million, Anderson said.
Keeping the payments low will help the city as it recovers from the pandemic, he said.
The bond money will help fund the city's 2021 capital budget of about $123 million. Projects planned this year include bridge upgrades, street resurfacing and landslide remediation.
Tom Davidson is a Tribune-Review staff writer. You can contact Tom at 724-226-4715, email@example.com or via Twitter .