Fitch Ratings said it upgraded the rating on the District of Columbia's approximately $2.8 billion in outstanding general obligation (GO) bonds to AA from AA-minus.
Fitch assigned a AA rating to D.C.'s upcoming $386.5 million GOs series 2014C and $136.9 million GOs series 2014D, expected to sell via negotiation on or about the week of Oct. 6.
The rating outlook is stable.
The bonds are general obligations of the District, with its full faith and credit pledged. Also pledged is revenue from a special real property tax, unlimited as to rate or amount and levied in an amount to pay debt service on GO and parity bonds.
The upgrade reflects the District's strong financial performance and clear fiscal flexibility, despite significant contraction in its primary economic driver. The District's financial management practices are sound. Reserve balances are solid, rebounding strongly after recessionary drawdowns. While the District's revenue projections incorporate estimates regarding federal sequestration, Fitch believes additional downside risk remains given the potential for more extensive federal deficit reduction.
The rating incorporates Fitch's expectation that the District will be able to address these challenges in a prudent and timely manner.
