Pittsburgh's bond rating bumps up from stable to positive

Pittsburgh is in line for a better interest rate on a $50 million capital improvement bond it intends to issue next month after Fitch Ratings upgraded the city’s bond rating Monday to positive, Mayor Bill Peduto said.

It had been rated as stable.

“We had gotten up to stable, and now, we have gotten into positive outlook,” the mayor said. “Now when we look to borrow $50 million for needed capital and infrastructure investments, we’re able to do so with a better interest rate. Our bond rating has a direct effect on the interest rates that are charged by the banks.”

The rating agency cited Pittsburgh’s ability to generate an annual surplus in recent years and noted that the city has an ordinance that requires a general fund reserve of at least 10% of general fund spending and limits annual debt service costs to 12% of operating expenses. It also credited the city with a “very strong operating performance” and “exceptionally strong ability to manage through downturns.”

“The revision of the outlook to positive 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 report said.

Pittsburgh maintained a stable AA- rating from Standard & Poor’s, according to a report released by the agency Friday.

The city was rated at junk bond status in 2004 when it faced nearly $1 billion in debt and chronically underfunded employee pension plans.

Its bond rating steadily increased over the years as it navigated state fiscal oversight that limited spending and debt. Pennsylvania released Pittsburgh from its Act 47 program for financially distressed municipalities in 2018.