A decade ago, the city of Pittsburgh’s municipal bonds were a risky investment.
That’s a far cry from where the city is today, says Scott Kunka, director of finance for the city of Pittsburgh.
“Back in 2004, the city was essentially in junk bond grade, non-investment, and that was the year the city declared distressed status for Act 47,” said Kunka. “We’ve made about 12 to 13 increases in our credit rating over the last seven years, so it’s been a slow but steady rise.”
This week, Standard & Poor’s Rating Service announced that the city’s credit rating had been upgraded to A+ stable, one step away from the highest possible rating of AAA.
“It means, in the long run, that the city’s financial position is being recognized as improving drastically,” said Kunka. “It also means, on a more practical basis, when the city goes out to borrow money or we need to do any type of financial maneuvering, that the cost to the city and to the residents is far less than it used to be.”
As the city struggles to get its financial house in order under Act 47 oversight, it has eschewed the issuance of new bond debt. But, Kunka said, even if the city isn’t issuing bonds, a high rating still has symbolic value.
“It boosts confidence for people who want to invest in the city. It shows that the city is stable and secure,” said Kunka. “It also means that outside parties recognize the steps we’ve taken to institutionalize some of the solutions we’ve put in for our long term legacy problems.”