S&P Global Ratings said it has raised its long-term and underlying rating on the city of Allen Park, Mich.'s existing general obligation debt to BB from CCC-plus.
In addition, it is no longer making a rating distinction between the city's limited-tax GO debt and unlimited-tax GO debt because the agency believes the city now possesses the financial flexibility with very strong general fund reserves to sustain identical ratings on both types of GO pledges. The outlook remains positive.
"The upgrade reflects our opinion that we no longer believe the city's limited-tax GO debt is at possible risk of default based on city's recent successful ability to remarket a material portion of its debt as well as building and maintaining very strong available reserves," said S&P credit analyst Errol Arne.
"Our positive outlook is based on our opinion that there is a one-in-three chance that we could raise our rating on the city within the next year due to our expectation that it will sustain its very strong budgetary flexibility and strong budgetary performance under its own authority without oversight or financial assistance from any state appointed entity," added Arne.
The positive outlook reflects the opinion that there is a one-in-three chance that S&P could raise its rating on the city within the next year as management demonstrates its ability to maintain balanced operations without state oversight for a sustained period of time.
If for any reason, the city requires outside intervention (including any additional state loans) or if the budget falls out of operational balance or if reserves are materially affected, S&P said it will revise the outlook to stable.