City of Lubbock Maintains AA+ Bond Rating

Start Date: April 11, 2018, 8:00 AM
End Date: May 02, 2018, 11:59 PM

The City of Lubbock has maintained its AA+ bond rating with a stable outlook. This is the second highest quality bond rating a municipality can receive and represents a high credit worthiness with low risk of default.

The rating reflects the opinions of both S&P Global Ratings and Fitch Ratings agencies. Each agency uses independent methodology to evaluate a municipality’s credit worthiness, and both praised the City of Lubbock for very strong management and fiscal policies, strong budgetary performance and flexibility, and very strong liquidity.

“Our financial house is in good order,” Mayor Dan Pope said. “This rating combined with our most recent audit show that City leaders are dedicated to fiscal responsibility. With continued determination, I believe we will reach the best bond rating of AAA.”

S&P Global Ratings noted that the City of Lubbock maintains “very strong management, with ‘strong’ financial policies and practices under our Financial Management Assessment (FMA) methodology.” Fitch Ratings commended the City’s expenditure framework, noting that the City’s “solid expenditure flexibility is derived from management’s prudent budgeting practices,” and “Fitch expects growth-related spending demands to be matched by revenue gains, keeping their trajectories generally aligned over time.”

“The City Council has provide clear direction on the budgetary goals,” City Manager Jarrett Atkinson said. “Staff continues to focus on lowering debt, while maintaining quality services to keep the City’s financial outlook strong.”

Both S&P and Fitch mentioned that overall debt is the primary factor keeping the City from the “AAA” rating. However, as S&P states, “approximately 71.6% of the direct debt is scheduled to be repaid within 10 years, which is in our view a positive credit factor,” indicating that management’s current push towards reasonably cash funding projects, vehicles, and equipment puts the City on the path towards an improved credit rating.

“The AA+ ratings from both agencies affirms that the City continues to progress in the right direction,” Chief Financial Officer Blu Kostelich said. “We will maintain our approach in using cash on hand whenever practical to further reduce our debt profile, while maintaining the fiscal and budgetary discipline praised by both S&P and Fitch.”

Links to the full reports from S&P Global Ratings and Fitch Ratings are below:

S&P Report

Fitch Report 

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