Standard & Poor’s upgraded Buffalo’s general obligation debt to BBB-plus with a stable outlook from BBB ahead of two bond deals expected to price next week.
“We have not had this rating since 1991 from S&P,” said Buffalo Comptroller Andrew SanFilippo. “At a time when rust-belt cities are struggling to make ends meet, we’re enjoying record surpluses ... now it’s up to $76 million.”
The rating agency cited the city’s improved financial profile, stronger financial controls, and city management’s willingness to adopt many of the Buffalo Fiscal Stability Authority’s control mechanisms. The upgrade affects about $700 million of outstanding debt.
“The upgrade further reflects the ongoing relationship between the city and BFSA, which together have worked to achieve structurally sound fiscal 2006 and 2007 operations, as well as a four-year financial plan that clearly identifies out-year operating gaps and gap-closing measures,” a Standard & Poor’s press release stated. It cited challenges that include the city’s weakened economy, a dependence on state aid that could be affected by New York’s fiscal difficulties, and unsettled union contracts that could require three years of retroactive pay when settled.
Buffalo plans to sell $22 million of GO bonds for various capital projects and $9 million for school projects. The school bonds are rated single-A because they will be issued under a state school aid intercept program called Article 99-B.
Government Finance Associates Inc. is financial adviser on the deal and Hawkins Delafield & Wood LLP is bond counsel. Depfa First Albany Securities LLC will lead manage the sale.
The bonds will be sold as serials with maturities out to 2023. A decision whether or not to insure the bonds has not yet been made.
Moody’s Investors Service rates Buffalo’s GOs Baa2.
