Bangkok--2 Nov--Standard & Poor's
Standard & Poor's Ratings Services revised its outlook to negative from stable and affirmed its 'AA' underlying rating (SPUR) and long-term rating on Glendale, Ariz.'s outstanding general obligation (GO) bonds. The outlook revision reflects our view of the city's continued drawdown of its reserves in order to balance its budget. At the same time, Standard & Poor's assigned its 'AA' rating to the city's series 2010 GO bonds.
The ratings reflect our view of the city's:
- Participation in the diverse Phoenix metropolitan statistical area (MSA) economic base,
- Strong financial management policies, and
- Strong wealth levels as measured by market value per capita.
- Partially mitigating our view of the above credit strengths is our view of the city's:
Sluggish regional and local economy, which has lead to declining general fund revenues, and
Moderate overall net debt burden, including all overlapping and direct tax-supported debt.
"We expect that the city's economy will likely ultimately stabilize, allowing for continued strong levels of financial reserves," said credit analyst Alda Mostofi. "However, if the economy continues to weaken, and financial reserves decrease substantially, the rating could be lowered," he continued.
Beginning in fiscal 2009, the city's general fund revenues have been on a declining trend, decreasing by approximately 12% and 5% in fiscals 2009 and 2010, respectively, to approximately $140 million. Management attributes the decline in general fund revenues mainly to the decline in the city's state shared revenues and motor vehicle-in lieu revenues, resulting from lower consumer spending.
RELATED CRITERIA AND RESEARCH
USPF Criteria: GO Debt, Oct. 12, 2006
Complete ratings information is available to RatingsDirect subscribers on the Global Credit Portal at www.globalcreditportal.com and RatingsDirect subscribers at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column.
Media Contact:
Ana Sandoval, New York (1) 212-438-5095,
[email protected]
Analyst Contacts:
Alda A Mostofi, San Francisco (1) 415-371-5061
Misty Newland, San Francisco (1) 415-371-5073