Fitch Ratings said it has downgraded the city of Dallas, Texas' $1.7 billion of outstanding limited tax general obligation debt and issuer default rating to AA from AA-plus.
The rating outlook is negative.
The GOs are payable from the city's ad valorem tax levy, limited to $2.50 per $100 of taxable assessed valuation (TAV). Certificates of obligation (COs) are additionally payable from surplus revenues of the city's utility system.
The downgrade reflects heightened concern about the city's unfunded pension liabilities given the reporting of updated plan valuations since the time of Fitch's last review that increased the total unfunded pension liability to the city's general fund by about 40%, and particular concerns about the city's DPFP (combined) plan pertaining to persistent investment losses and risks highlighted by recent developments related to its deferred retirement option plan (DROP).
