NEW YORK — Moody’s Investors Service affirmed Wilmington’s A1 rating on its general obligation limited tax debt Tuesday.
“The A1 rating reflects the city’s modestly-sized tax base which has begun to stabilize following the loss of its largest employer; healthy financial position despite recent deficits; manageable debt burden; and elevated exposure to unfunded pension liabilities related to state cost-sharing plans,” read a Moody’s press release about the affirmation.
In December 2011, Moody’s downgraded the city’s rating from Aa3 to A1, citing its diminished tax base and a $1.3 million budget gap in fiscal year 2012.
Tuesday’s prepared statement went on to say that “substantial growth and diversification of the tax base” could lead to an upgrade of the city’s rating.
By contrast, Moody’s said erosion of the tax base, deterioration of socioeconomic indicators, worse than projected financial performance this year or further deterioration next year could lower the city’s rating.
Bond ratings reflect the perceived quality of a city’s credit, and the ratings range from Aaa, the highest Moody’s offers, down to C.
In a document explaining the different ratings, Moody’s said A1 ratings are “upper-medium grade and are subject to low credit risk.”
A higher rating would generally allow the city to receive lower interest rates on its bonds and vice versa, should the rating fall.
The city has more than $2 million in bond debt that isn’t held by the city itself.
Wilmington Auditor David Hollingsworth could not be reached for comment.
Reach Nathan Kraatz at 937-382-2574, ext. 2510 or on Twitter @NathanKraatz.