Fitch Affirms St. Louis, MO's IDR at 'A-' and Municipal Finance Corp. RBs at 'BBB+'; Outlook Remains Positive.
ENPNewswire-May 20, 2022--Fitch Affirms St. Louis, MO's IDR at 'A-' and Municipal Finance Corp. RBs at 'BBB+'; Outlook Remains Positive
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Release date- 19052022 - Fitch Ratings has affirmed the City of St. Louis, MO's Issuer Default Rating (IDR) at 'A-' and the rating of the city's lease revenue bonds issued through the city's municipal finance corporation at 'BBB+'.
The rating action affects the following securities:
$108.8 million (Pension Funding Project) leasehold revenue refunding bonds (taxable), Series 2007 at 'BBB+'.
The Rating Outlook is Positive.
SECURITY
Leasehold revenue improvement bonds issued by the St. Louis Municipal Finance Corporation are rated one notch below the city's IDR, reflecting an annual appropriation pledge of general revenues to pay debt service.
ANALYTICAL CONCLUSION
Fitch's affirmation of St. Louis' 'A-' IDR)and 'BBB+' lease revenue bond rating is driven by the city's adequate gap-closing capacity, particularly strengthened available reserve balances, adequate spending controls and a moderate long-term liability burden. Revenue growth prospects, in the absence of further voter-approved tax increases, remain slow to stagnant.
The Positive Outlook reflects improved financial resilience as evidenced by the increases in reserve levels over the past several years. Continued stability in reserves as the city works through the economic uncertainty of the pandemic, including potential reduction of revenue streams related to telecommuters, could support an upgrade.
Economic Resource Base
St. Louis is the hub of a regional economy extending westward into central Missouri and across the Mississippi River into Illinois, with the city's downtown serving as the region's largest employment center. Health care and higher education are the main growth drivers. Resident wealth and income levels are below state and national averages, while the city's poverty rate is high and more than double that of the surrounding county.
KEY RATING DRIVERS
Revenue Framework:
Revenue growth prospects remain below the national rate of inflation, consistent with historical trends. The city's legal ability to raise revenues is constrained by state constitutional provisions that require voter approval for most tax increases. Voters have shown a tendency to approve most tax increases, including re-authorizing the earned income tax every five years, particularly when matched with proposals to fund...
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