Thu June 25, 2009
City Faces Bond Rating Downgrade
Kansas City, MO – As Kansas City prepares to sell municipal bonds for the Performing Arts Center parking garage, the city council Finance and Audit Committee got the news Wednesday that one of three companies that rate municipal bonds may be poised to downgrade Kansas City's bond ratings.
City treasurer Randall Landes told the committee that Fitch Ratings has expressed concerns for some time, and would be making a decision late Wednesday. He told the group, "Reality is: you do have a high debt load compared to your peers. They also are concerned - it's the same concern, on and on - about the thin reserve levels. If you have a lot of debt they sort of expect you to have a pretty substantial reserve."
Landes says if a downgrade comes, Kansas City's bonds will continue to be rated at investment level, but the change likely raise the interest rate the city would pay to the investors. It could also lower the initial amount the city takes in when the bonds are sold.