Allentown maintains credit rating, but pandemic's financial blow prevents S&P from upgrading 'negati
Allentown has run budget surpluses two straight years, but one of its credit rating agencies remains concerned about the city’s ability to weather the economic impact of the coronavirus pandemic.
S&P Global Ratings last week released a report maintaining a negative outlook on its long-term “A” rating of Allentown’s general obligation debt. The rating indicates Allentown is in a strong position to meet its obligations to bondholders, but is somewhat susceptible to economic shocks and downturns — such as, say, a pandemic. The negative outlook means there’s at least a one-in-three chance that S&P could lower Allentown’s rating over the next year or two.
S&P also assigned an “A” rating to the city’s latest $16 million general obligation bond issue. The city plans to use some of the proceeds to cover the costs of capital improvements initially funded with savings, thereby shrinking a projected 2020 deficit.
Credit Analyst Bobby E. Otter commended Allentown for achieving budget surpluses in 2018 and ’19 and restoring some cash reserves, which assuaged fears that political instability would impair city finances after former Mayor Ed Pawlowski’s conviction on corruption charges. The city also got kudos for settling its various legal disputes with the Lehigh County Authority.
Read more: https://www.mcall.com/news/local/allentown/mc-nws-allentown-credit-rating-update-sp-coronavirus-20200831-cr6mzikw3ram5a4cua5rga7r5m-story.html
(Allentown Morning Call)