Pittsburgh’s sustained financial health is attracting private investment and enabling it to fund neighborhood infrastructure needs, Mayor Bill Peduto said after the city’s latest boost in the capital markets.
Fitch Ratings raised its outlook on the city’s general obligation bonds to positive from stable while maintaining its AA-minus rating. The news came Tuesday as the city was finalizing a $50 million negotiated bond sale, scheduled for March 12, to help fund its 2020 capital budget.
Fitch’s revision “reflects the expansion of the local economy due to significant private investment and rebuilding efforts that have bolstered the city's revenue growth prospects,” the rating agency said.
Its findings "incorporate the city's very strong operating performance, including its exceptionally strong ability to manage through downturns, given its very high reserve cushion and significant independent legal ability to increase revenues.”
Peduto noted Fitch’s praise of the city’s commitment to financial overhaul since emerging two years ago from Pennsylvania’s so-called Act 47 workout program for distressed communities. “The city has since formalized many of the fiscal policies that were in place during the oversight period,” Fitch said.
In addition, Fitch affirmed at AA-minus the city’s $104 million Series 2012 A and B general obligation issuance, and $174 million in Series 1998C GO pension bonds.
S&P Global Ratings also affirmed its AA-minus rating for Pennsylvania’s second-largest city while maintaining its stable outlook.
“Pittsburgh's financial position is strong, despite pressures from long-term liabilities,” S&P said. “With debt-reduction goals met in 2019, the city continues to focus on improving its pension funding. However, we anticipate these liabilities will remain a credit pressure in the near term.”
Pittsburgh in 2003 was on the brink of bankruptcy, the only major U.S. city whose bonds were junk. It laid off nearly 500 employees, including 100 police officers. It closed recreation centers and swimming pools, and eliminated services including mounted police patrols.
It has since received multiple upgrades from bond rating agencies after transforming from a Rust Belt city to an “eds and meds” center focused on higher education, healthcare, financial services and technology.
The University of Pittsburgh and Carnegie Mellon University are among its largest regional employers.
Over the past 15 years, Fitch said, citing city data, technology has expanded to roughly 2,400 firms that employ more than 90,000 people. Pittsburgh reported $550 million in private investment in 2018, primarily for autonomous vehicles and robotics firms. That followed a record $688 million of private investment in 2017 from firms that included Google, Uber ATC, Amazon and Apple.
The city had also operated under a second overseer, the Intergovernmental Cooperation Authority, which the state legislature created in 2004 to work jointly with the Act 47 team.
