Fitch Ratings late Tuesday upgraded Boston’s general obligation bond rating to AAA from AA-plus with a stable outlook, affecting $502 million of outstanding bonds.
The upgrade “reflects management’s notable efforts to address its outstanding pension and [other post-employment benefit] liabilities and its consistent maintenance of solid reserve levels throughout the recent recession,” Fitch said in a statement.
Fitch cited the Massachusetts capital’s broad economic base, growth in recurring revenues, low debt levels and a fiscal 2013 budget that does not rely on the use of general fund reserves.
“Due to management’s prudent budgeting practices, the city has largely avoided operating deficits and maintained its strong unreserved general fund balance,” Fitch said of the 618,000-population city.
In March, when Boston sold $230 million of new-money and refunding GO bonds, Moody’s Investors Service rated them Aaa, while Standard & Poor’s assigned a AA-plus.
“We’re very attractive as a city, but also as a credit. We have a conservative debt profile. From a financial management perspective, we have a stable team and a history of success,” chief financial officer Meredith Weenick said in an interview at the time.
Boston had a $5.9 million surplus for fiscal 2011, including an unbudgeted $17.5 million reserve established primarily for a judgment against the city over police overtime pay.
According to Fitch, management has indicated that fiscal 2012 results should again be positive without using $30 million in budgeted reserves.