Petersburg Receives Bond Rating Upgrade to “BBB+”; Outlook Remains ‘Positive’
Standard & Poor's (S&P) Global Ratings has raised its long-term rating and underlying rating (SPUR) on Petersburg's general obligation (GO) bonds outstanding to 'BBB+' from 'BBB-'. The outlook remains positive.
The upgrade reflects S&P's view of Petersburg's continued achievement in rebuilding a sound financial position, including increased reserves and liquidity, such that short-term cash flow borrowing is no longer necessary. The city's financial position has significantly improved over the past three years because Petersburg has fully repaid past-due obligations, assembled a new management team, and strengthened budgetary flexibility and liquidity, supported by formally adopted financial policies.
"This upgraded bond rating is proof that we're continuing on the right path. We have re-built the financial foundation for the City of Petersburg and cemented our financial future by embedding sound fiscal practices throughout our operations," said Mayor Sam Parham.
Looking back to 2014, the city's bond rating was downgraded to "BBB" with a stable outlook. In 2016, the city was downgraded once again to "BB" with a negative outlook. This most recent upgrade marks the third consecutive upgrade, up from "BB+" with a positive outlook in 2018, to "BBB-" with a positive outlook in 2019, to "BBB+" with a positive outlook in 2021.
“The fact that the City received a double upgrade from Standard & Poor’s during this pandemic is very impressive. It demonstrates that the City is making tremendous progress in turning the corner and getting its financial affairs in order,” said representatives from Davenport & Company LLC, Financial Advisor to the City.
The fiscal year 2020 year-end results continued this positive momentum. The city ended the fiscal year 2020 with a strong surplus due to additional cost-cutting measures, conservative budgeting, and some expense savings following the onset of the COVID-19 pandemic. The surplus increased reserves to a level that S&P considers very strong, eliminating the need to issue revenue anticipation notes (RANs) during the year for cash flow purposes.
Petersburg's debt and contingent liability, liquidity, budgetary flexibility, and budgetary performance were all described as strong by S&P.