Moody’s credit rating agency maintains ‘negative outlook’ for City of Alexandria

Moody’s credit rating agency maintains ‘negative outlook’ for City of Alexandria

Laura Triggs, a top city financial official, is disappointed Moody’s did not remove Alexandria’s “negative outlook” label, but said the designation will not hurt the city.

Though Moody’s reaffirmed Alexandria’s triple-A credit rating during the summer, it slapped the city with a negative outlook — pending review — not long after. The move came during the height of the deficit debate in Washington. The international credit rating agency cited Alexandria’s close ties to the federal government when it made the announcement.

City officials met with Moody’s personnel in November, making the case Alexandria is sufficiently insulated from whatever spending cuts the federal government might weather.

But instead of considering the city’s finances individually, Moody’s pooled Alexandria with neighboring municipalities, Triggs said. They confirmed the “negative outlook” earlier this month.

“You have to be [disappointed], but from a day-to-day standpoint, does it change the way we operate? No,” Triggs said. “We know that we operate the city in a way that would allow us to keep operating with or without action by the federal government.”

Nearby Arlington and Fairfax counties also retained the negative financial label, as did many other municipalities in the Washington region. Were Moody’s to downgrade the federal government’s credit rating, as Standard and Poor’s did during the summer, nearby municipalities would likely follow suite, agency officials said.

So far the negative outlook label has not translated into trouble in the bond market, like higher interest rates on borrowing. Since the city’s current debt is locked in at a fixed rate, any changes to the city’s credit rating would affect new borrowing only.

That didn’t stop Mayor Bill Euille from joining his colleagues across the region in condemning the label. In a             joint statement with elected officials across Northern Virginia, Euille slammed Moody’s for acting prematurely.

“Since no one can predict what the federal government will do or how its actions may impact Northern Virginia, focus should be placed on what is known — how this region has managed the unexpected while maintaining financial excellence,” the group of local mayors and chairs said.

Any negative effects of Moody’s review will not be felt until the city returns to the bond market in the spring.