Bond Rating

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Finance

Fiscal Year 2016-17
Target: Aa1 (Moody's)
Target Status: MEETING GOAL

San Francisco’s General Obligation (GO) bond rating acts as the City’s credit rating and is a measure of the overall financial stability of the City. In order to fund large capital projects, the City issues bonds, or debt, and the purchase of those bonds provides the financing for these capital projects. The GO bond rating indicates how safe of an investment the City’s bonds are to potential purchasers. There are three main municipal bond rating agencies: Moody’s, Standard & Poor’s, and Fitch. Each rating agency has a proprietary methodology for assigning ratings to a municipality.

MOODY’S RATING HAS REMAINED Aa1 SINCE FEBRUARY 2013

How San Francisco is Performing

Moody’s: Moody’s has assigned a rating of “Aa1” to San Francisco, which is the second highest rating an entity can receive in the Moody’s rating scale, the highest being “Aaa”. The “Aa” classification indicates that the City is a very low credit risk. Moody’s appends a numerical value (1, 2, and 3) to each rating classification, with 1 ranking at the higher end of the classification. Therefore, a rating of “Aa1” means that San Francisco ranks at the top of its classification. According to the most recent rating issuance from Moody's in October 2016, the outlook on the city's long-term ratings is stable. The outlook recognizes the city's large and diverse tax base, which is fundamentally sound, and the city's financial position, which should remain stable given the financial policies implemented by city management.

Standard & Poor’s: Standard & Poor’s (S&P) has assigned a rating of “AA+” to San Francisco, which is the second highest rating on the S&P scale. The “AA” classification indicates that the City’s capacity to meet its financial commitments on its debt is very strong. The appendage of the “plus” indicates that San Francisco is in the upper bounds of this classification.

Fitch: In January 2016, Fitch upgraded its credit rating to AA+ from AA for general obligation bonds, indicating that the City has very high credit quality and is a low default risk. According to Fitch, the upgrade “reflects the City’s fiscally prudent institutionalized financial policies which, along with several years of strong economic and revenue growth, have resulted in robust rainy day and budgetary reserves. These policies are expected to result in maintenance of solid financial flexibility through the economic cycle.”

Additional Information

Data

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