Moody’s Investors Service recently raised Glendale’s bond rating for the first time after years of downgrades. The change affects approximately $625 million connected to the city's general debt obligations.
Improving finances and a growing tax base are some of the reasons why Moody’s decided to to raise Glendale’s rating. Passage of time, audited financial data and a positive mid-fiscal year sense of Glendale’s current budget drove the decision to raise the city’s bond rating, said Pat Liberatore, an analyst for Moody’s.
“The upgrade means more that the city’s credit profile has improved,” Liberatore said. “That there are less risks to the city and its bondholders then we would have seen previously.”
Moody’s also cited metro-Phoenix’s recovering economy as another reason it raised Glendale’s rating. But the agency warned that a Valley-wide economic downturn could force it to lower the rating.
The upgrade comes shortly after Kevin Phelps took over the city manager’s office. One of his top priorities is to develop a strategic plan that ensures Glendale can financially weather a recession.
“I know that with a well thought out plan that will be something that Moody’s, Standard and Poor's, other agencies, will have a positive reaction to,” Phelps said.
Glendale hasn’t had a strategic plan in nearly a decade, Phelps said. While a good one evolves over time, he hopes to have the core elements in place within six to nine months. In the meantime, the upgrade means Glendale will pay less interest when selling future bonds, said Tom Duensing, interim assistant city manager.
“In other words, there is a more of a demand on those bonds because they’re safer investments,” Duensing said.
Maintaining a conservative budget and continuing to build the city’s savings will help Glendale’s rating going forward, Duensing said.
It will take years of additional improvements before Glendale’s rating is upgraded again, Liberatore said.
