Moody's Ratings said it upgraded Savannah, Georgia's issuer and general obligation unlimited tax-backed ratings to Aaa from Aa1.
The agency has also affirmed Savannah's Aa1 rating for its outstanding water and sewer enterprise revenue bonds and assigned a Aa1 rating to its Series 2026 water and sewer revenue bonds.
The outlook was revised to stable from positive. The city has an estimated $418 million of debt outstanding.
"The upgrade of [Savannah's] rating to Aaa reflects the expectation that the city's leverage will remain comfortably within the rating category despite near-term capital borrowing plans," according to Moody's report. "The upgrade also reflects the city's continued financial strength that has extended for decades and been preserved even during recessionary periods via prudent budget management."
Financial strengths that contributed to the city's rating include healthy financial reserves, a trend of balanced budgets, a growing economy that is attracting jobs and residents, strong revenue growth and unlimited legal authority to increase primary revenue streams, Moody's analysts said in a separate credit opinion.
The upgrade also incorporates Savannah's strong budget management, organic revenue growth and broad budget autonomy.
"The city's available fund balance has exceeded 80% of revenue since fiscal 2019, well above Aaa-rated peers," according to the report. "And while a significant portion of these available reserves have been earmarked for future capital outlays, we anticipate this ratio to remain well above 40% for the foreseeable future."
Even though the city has a growing debt burden — mostly from the city's water and sewer enterprise — Moody's analysts "expect the city's long-term liabilities ratio to remain below 160% of revenue."
Savannah's GOULT rating "reflects the city's contractual pledge to levy an unlimited property tax for repayment of the bonds," according to the report.
The water and sewer revenue bonds' Aa1 rating is based on a large and diverse regional service area, strong revenue growth prospects, and robust financial reserves. Revenue growth will be supported by rising demand and annual rate adjustments; however, debt service coverage "is expected to moderate to about 1.9x as new borrowing comes online," according to the report. A decline in liquidity is also expected compared to 2025 levels.
"The stable outlook reflects the expectation that prudent management and continued economic momentum will help the city accommodate its near-term capital plans and associated borrowing needs while maintaining a credit profile consistent with the current rating," according to the report.
S&P Global Ratings rates Savannah's issuer credit AA-plus with a stable outlook.
