Moody’s Investors Service on Monday upgraded to Aa2 from A1 the Atlanta and Fulton County Recreation Authority’s Series 2007A and B revenue bonds sold to make repairs and improvements at the Atlanta Zoo and to refinance outstanding debt.

The upgrade affects $20.2 million of bonds.

Moody’s removed the bonds from watch but maintained a negative outlook.

The rating was placed under review with “uncertain” direction in May in conjunction with a new rating methodology Moody’s adopted.

The zoo bonds are secured by several full-faith and credit pledges obligating Atlanta to pay three-quarters of annual debt service and Fulton County to pay one-quarter of annual debt service over the life of the bonds.

Moody’s assigns Aa2 ratings to the city  and county’s general obligation bonds.

The city’s annual payment is additionally capped at $1.6 million and the county’s at $542,000, Moody’s said, noting there is no debt-service reserve fund.

Though three-quarters of the last payment of debt service, in 2022, is $1.6 million and slightly higher than Atlanta’s $1.6 million payment cap, Moody’s said it does not believe bondholders are at risk from the remaining portion of unpledged debt service due to its small size and the unconditional pledge of the participants.

The combined debt service for 2022 is within the combined cap of the city and county’s pledges.

The negative outlook on the zoo bonds reflects Atlanta’s GO guarantee and the negative outlook Moody’s has on the city’s Aa2 GO rating.

The rating could go down if Atlanta’s financial position deteriorates or there is a downgrade of either participant.

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