All City of Lodi debt, which includes bonds backed by the General Fund and various utility funds, is now rated in the A range after Fitch Ratings upgraded the Electric Utility to A-.
Wednesday's upgrade, from BBB+, is the third ratings boost of Lodi Electric debt by Fitch since August 2007. The new A- rating comes with a "stable" outlook for the utility's financial future. Bonds are typically rated on a letter scale by the financial industry with variations of A ratings at the top, followed by B, C, etc.
"We're pleased that Fitch Ratings is validating the hard work and difficult choices our City Council has made in recent years to get our Electric Utility on sound financial footing," City Manager Konradt Bartlam said. "A ratings upgrade in this economic environment is a significant accomplishment for the City that will benefit all our electric customers."
The boost by Fitch comes after ratings agencies Standard & Poor's and Moody's have given the Electric Utility A- grades. Fitch cited the City's change in management practices in recent years and the cost-effectiveness of the future Lodi Energy Center power plant as major reasons for the enhanced rating.
Lodi's General Fund-backed certificates of participation, issued in 2002, are rated an even higher AA- by Fitch, and the 2007 wastewater bonds are rated A+. Moody's and Standard & Poor's recently gave the City's water utility AA- ratings for bonds issued to construct a water treatment plant.
Ratings in the A category mean lower borrowing costs if the need arises to finance additional projects, as well as a greater willingness by potential suppliers to enter into long-term contracts with the City.
The press release from Fitch Ratings is available here.