Detroit’s Credit Rating Gets a Boost
Moody’s ups Detroit’s credit rating, cites relatively good economy, conservative budgeting. But warning signs remain.
Credit ratings agency Moody’s Investors Service is upgrading its outlook for the city of Detroit.
Moody’s is raising Detroit’s credit rating a full level from B2 up to B1.
The agency applauds the city’s “very conservative” fiscal approach and an economy Moody’s says is strong “considering its historic contraction.”
Detroit Mayor Mike Duggan, for one, says Moody’s new rating shows that the city is managing its finances well following its exit from the nation’s largest-ever municipal bankruptcy.
“Two credit rating upgrades in the last three years and a favorable outlook for future upgrades,” Duggan says.
But Moody’s cautions that the positive outlook hinges on Detroit’s ability to fund its long-term pension liabilities, which the agency says are expected to spike in the coming years.
The agency also notes that Detroit’s financial future is tied to what it calls a “weak socioeconomic profile,” “low industrial diversity” and a budget that is “highly dependent on continued revenue growth.”
