City's Credit Rating Upgraded by Moody's Investor Services

Communications Director

Kristin Farley
(865) 215-2589

400 Main St., Room 691
Knoxville, TN 37902

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City's Credit Rating Upgraded by Moody's Investor Services

Posted: 04/22/2010
Moody's Investors Services has upgraded the City of Knoxville's credit rating from Aa2 to Aa1, the second highest rating available after completing a recent recalibration of its municipal ratings.

The upgrade marks the third year in a row that one of the three major bond rating agencies - which provide information to investors - has either upgraded or affirmed the city's credit rating.

In 2008 Standard & Poor's upgraded Knoxville's rating to AA+ and in 2009 the Fitch Rating Service affirmed its AA+ rating for the city. 
"Obviously I'm pleased with Moody's decision," said Mayor Bill Haslam. "It's clearly reflective of the city's financial stability which is the result of a lot of hard work by the administration and City Council to manage our resources carefully in a very difficult economic climate." 
"I think this acknowledges a strong financial performance by the city," he added.

The city reported operating surpluses during each of the past six years during with the city's fund balance, essentially its savings account, growing from $18.5 million when Haslam took office in 2003 to the current balance of $52.3 million.

The city has not had a property tax increase since 2004.

Last year the fund balance grew from $49.5 million to $52.3 million despite the worst economic conditions since the Great Depression. 
"To increase your fund balance under those circumstances, that's pretty good," said Jim York, the city's finance director.

The three bond rating agencies provide information that is used by investors and the improved bond rating means that the city should be able to borrow money at a lower interest rate. It also means that more investors might be interested in buying the city's bonds.

"Investors look at this and say we are a credit worthy government, have a low risk of default and are well-managed," York said.

Knoxville has not borrowed any new money in several years and does not anticipate issuing bonds in the near future.

York said the upgrade from Aa2 to Aa1 wasn't unexpected. 
"This is probably more consistent with what we are getting from the other two ratings agencies," he said.