The nation’s two bond rating agencies, Standard & Poor's Ratings Service and Moody's Investors Service, have affirmed Lexington’s AA bond rating with a stable outlook.
“Receiving a stable outlook in the midst of the COVID-19 epidemic is quite an accomplishment for our City,” Mayor Linda Gorton said. “It’s the result of strong fiscal management, and a reflection of the strength of our regional economy.”
The rating came as part of the issuance of $33 million in bonds to restructure debt for the renovation of Lexington Center. The restructuring was made necessary by the decline in revenue Lexington Center has experienced as a result of the pandemic.
“With the severe impact on the hospitality industry, Lexington Center’s revenue decline was immediate,” Gorton said. “To keep the renovation project going, and to protect a vital economic engine for downtown and the community, the City needed to step in and assist. The restructuring affords Lexington Center, Lexington, and the sport, entertainment, and hospitality industries time to weather COVID’s economic shock.”
In reaffirming a stable outlook, Moody’s noted Lexington’s “sizable and growing tax base that serves as a regionally important urban center,” the “stabilizing institutional presence of University of Kentucky,” and “healthy resident income levels.”
The announcements mean that Lexington will be able to continue to borrow money at a low rate. A downgrade in the city’s bond rating would mean that Lexington would have faced higher interest rates.
Going forward, the rating agencies emphasized the importance of reestablishing cash reserves, closely managing debt issuance, and managing the pension increases.
“We know we need to continue to manage our finances carefully and conservatively,” Gorton said. “But we have passed an important test.”