San Francisco Mayor Giddy After Standard & Poor's Upgrade

LOS ANGELES -- San Francisco Mayor Ed Lee is crowing after Standard & Poor’s upgraded the city’s general obligation bond rating to AA-plus from AA, the highest rating in the city’s history, according to the mayor.

Moody’s Investors Service and Fitch Ratings affirmed their respective Aa1 and AA ratings, and stable outlooks.

“At a time when many cities and counties across California and the U.S. have seen their credit ratings suffer amid lingering financial uncertainty, San Francisco’s upgraded bond ratings are leading the state,” Lee said in a statement released Wednesday. “We are creating investor confidence in our city with strategic investments while applying strict budgetary and financial controls to protect San Francisco’s continuing economic recovery.”

Standard & Poor’s assigned the new rating on Tuesday, based on its recently released local government general obligation bond criteria.

The new methodology was published Sept. 12 and aims to improve transparency, and make the criteria more in-depth, detailed, and forward looking, according to Standard & Poor’s.

The agency also upgraded the city’s lease revenue bonds and certificates of participation rating to AA from AA-minus. The outlook on all the ratings is stable.

Standard & Poor’s analyst Misty Newland said in a report that the ratings reflect Standard & Poor’s view of the city’s very strong economy, adequate budgetary performance, very strong liquidity, and very strong management conditions with strong financial policies. She also noted the city’s weak debt and contingent liabilities, due to large pension and other post-employment benefit obligations.

The ratings were assigned ahead of the city’s planned issuance of approximately $37 million of certificates of participation on Oct. 17. Proceeds will be used to fund construction and renovation of multiple piers owned and operated by the Port Commission of the City and County of San Francisco.

Moody’s and Fitch rate the COPs at Aa2 and AA-minus, respectively.

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