WASHINGTON — The District of Columbia's general obligation bonds have received an upgrade to Aaa from Moody’s Investors Service, 23 years after the city’s finances became so dire that Congress intervened.
Moody’s and D.C. Chief Financial Officer Jeffrey DeWitt both announced the upgrade Thursday, touting the district’s strong financial management in contrast to its rocky past.
D.C. received GO rating upgrades to AA-plus from AA by both Fitch Ratings and S&P Global Ratings in early July.
Congress established a control board in 1995 to manage the district’s finances after it hit rock bottom. The board became dormant in 2001 after the city achieved a turnaround.
“The upgrade to the general obligation rating reflects continued strengthening of the district's economy, finances and overall credit profile, propelling it into the top rating category,” Moody’s said in a release. “The district has exemplary fiscal governance, and its updated four-year financial plan is its strongest ever. The district already has among the lowest pension liabilities of any large city, and has pre-funded its other post-[employment] benefits (OPEB) liability, which affords it significant financial flexibility.”
DeWitt hailed the achievement, noting how far the city has come.
“In 1995, the district's bonds were far below junk bond status,” he said. “Today, the district enjoys Moody's highest possible credit rating of Aaa, placing it among the highest rated large cities in America.”
D.C. Mayor Muriel Bowser said the upgrade validated the city’s efforts to become more appealing to both residents and investors.
“This rating is a recognition of the hard work our community has done to build a fiscally responsible city — a city that is a great place to not only live and work, but to invest in and do business,” she said.
The D.C. control board, formally known as the D.C. Financial Responsibility and Management Assistance Authority, will remain dormant so long as the district does not suffer a regression, such as failing to balance its budget. The specter of the board loomed large for a time following the Great Recession, but the city has managed to avoid surrendering its financial independence once again.