Washington’s credit grade was raised by Fitch Ratings and Standard & Poor’s as the nation’s capital prepares to sell $523 million of bonds next week.
The city’s general obligation bonds, which are backed by its promise to repay, were raised one rank to AA, the third-highest level, the companies said in separate statements Monday.
The move reflects the financial practices of the municipal government, whose coffers have swelled as a result of rising tax collections, Fitch said. While federal spending cutbacks are restraining its economy, the city ended the 2013 budget year with reserves of $1.7 billion, equal to about one-fourth of annual revenue. S&P cited general-fund surpluses in boosting the city’s mark.
The upgrade shows the district’s “strong financial performance and clear fiscal flexibility, despite significant contraction in its primary economic driver,” Fitch said.
The higher rating may help lower Washington’s borrowing costs next week, when it plans to sell general obligations to finance construction projects and refinance debt.
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