Niagara Gazette — The city of Niagara Falls received some welcome news this week from one of its bond rating agencies.
Fitch Ratings on Wednesday announced that it has affirmed the city’s “BBB” bond rating and removed the city’s rating from “negative watch” while assigning it a stable outlook.
In a release issued by the ratings agency, Fitch indicated that the decision was based largely on the recent delivery of long-awaiting gaming revenue that had been tied up as part of a dispute between the Seneca Nation of Indians and the state of New York.
The ratings agency notes payment of casino revenues does not represent an end to concerns surrounding the city’s economic future and raises concern about what it describes as uncertainty about future revenue payments as outlined under a gaming compact that is set to expire in 2016.
“As a result of the delay in these payments, the city’s cash reserves were rapidly declining, and were projected to run out of cash before the end of 2013,” Fitch noted. “In light of this, Fitch placed the city’s debt on rating watch negative. The recent payment will restore these reserves and help the city fund some delayed capital needs. However, the ‘BBB’ rating recognizes that the city still faces a number of challenges, particularly a weak socioeconomic core and continued reliance on these revenues.”
Ratings agencies like Fitch periodically review the financial soundness of various businesses and municipalities to determine their credit worthiness. Higher ratings generally mean lower interest rates on borrowing for the entities involved. The city’s bond rating took several hits in recent months amid concerns about the lack of incoming casino revenue and its impact on overall city operations.
“BBB” is the lowest rating within a category known as “investment grade” for Fitch.