S&P: Minneapolis' 2016 GO Debt Assigned 'AAA' Ratings; Other Ratings Affirmed
"The 'AAA' rating reflects the city's very strong economy, management, budgetary flexibility, and liquidity," said S&P Global Ratings credit analyst Scott Nees.
The bonds are secured by the city's GO pledge and are payable from ad valorem tax against all taxable property within the city without limit as to rate or amount. The bonds are additionally secured by special assessments, parking revenues, and net revenues of the city's water and sanitary sewer systems. Though secured by multiple revenue streams, we rate the bonds to the city's GO pledge, and we similarly rate several of its existing GO bonds that are additionally secured by other revenues to its GO pledge. City officials will use bond proceeds to finance various capital projects and to refund existing debt for interest cost savings.
Minneapolis, with an estimated population of 404,168, is in Hennepin County and is the largest city in Minnesota.
"The stable outlook reflects our expectation that the Minneapolis economy should continue to see strong growth through at least the two-year outlook horizon, with the city's very strong economic base supporting ongoing revenue growth and overall budget stability," added Mr. Nees. We also believe that debt levels should remain relatively low for a city with such an extensive capital program, and its pension costs manageable.
Downside pressure would most likely come via weakening across multiple factors, such as a slowdown in the economy leading to weaker economic metrics, resulting in weaker revenue performance, and perhaps accompanied by rising pension costs. Given that we do not expect such a scenario in the next few years, we do not anticipate lowering the rating within the two-year outlook horizon