Mayor-President Melvin L. "Kip" Holden received word today that Standard & Poor’s Rating Services raised its bond rating for the City of Baton Rouge from AA+ to AAA, the highest possible rating.
Baton Rouge becomes the only city in Louisiana to receive a AAA rating from S&P, and is one of approximately 200 cities nationwide with such a rating, according to data provided by S&P.
Baton Rouge’s upgrade is for bonds supported by the city’s sales tax revenue, which have had a strong showing in the past three years. The bulk of the City-Parish’s bonds have been issued for roads and sewer, and are supported by other revenues.
"This is extremely good news for the taxpayers of Baton Rouge because it will likely translate into direct savings through lower interest rates on our future bonds," said Mayor Holden. "We fiercely protect our bond rating because of its impact on our budgets, and we have worked to keep our local economy strong during even the most difficult economic times. This upgrade in our rating shows Wall Street's confidence that Baton Rouge is on the right track."
In a report explaining their rationale for the upgrade, S&P analysts noted that Baton Rouge’s per capita retail sales are a very strong 140 percent of the national level, reinforcing its continuing role as a “regional economic hub,” as well as its improving debt service coverage and lack of additional parity debt plans.
The rating agency noted that while Baton Rouge has an estimated population of about 230,000, the city serves as a regional economic center for a regional population of more than 800,000.
In their report, S&P analysts also noted that Baton Rouge’s sales-tax revenues are expected to increase by an additional 1.5 percent in 2014.
Gordon King, the city’s financial advisor, said the AAA rating is higher than the S&P’s rating for the United States government, which is currently AA+.
King credited the S&P upgrade in part to the vision of Mayor Holden and the leadership of the City-Parish Finance Department.
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