DETROIT (FOX 2) – Detroit’s credit rating has been improved by Moody’s Investors Service, which means the city will be able to borrow more money, at a lower rate, allowing it to do more for the city.
In Moody’s rating scale, the city of Detroit went from a Ba3 to a Ba2, similar to a credit rating, with Ba1 being the highest. Moody’s chose to upgrade the rating, with a “positive” outlook, in a report released Wednesday, which will strengthen the city’s financial situation.
A good credit rating can make borrowing easier and more affordable.
Detroit saw Moody’s last upgrade in May 2018, although it was the first time in 13 years that the city received a Ba2 rating. Higher ratings mean lower costs for governments when borrowing funds to pay for city necessities and improvements.
“Detroit’s revenue base has been exposed to the economic disruption caused by the pandemic. Income taxes have fallen due to remote working by non-residents, and betting taxes have been halted as casinos closed. “, states the Moody’s report.
The report also highlights the diversification of the city’s economic base and strengthening job growth. Detroit plans to further expand its job base with GM and Ford, as well as other auto suppliers, by making investments in the city that would create jobs.
Detroit is also preparing to become a logistics hub, a position that will be strengthened by the construction of a second international crossing, the Gordie Howe International Bridge. Additionally, Huntington Bank, which recently absorbed TCF and Chemical Banks, is making Detroit its commercial banking headquarters and constructing a new 20-story building.
“Moody’s upgrade is a recognition of the hard work being done to bring the city out of bankruptcy,” said Jay Rising, chief financial officer for the city of Detroit. “We know we still have work ahead of us and are confident that we will overcome the challenges to the City’s credit posed by future pension funding risks.”
The full report is available at Moody’s Investors Services Credit Opinion on Detroit