Albuquerque earns top credit rating from S&P Global Ratings

The City of Albuquerque received high marks on a credit rating review last week, a sign to potential investors that the city is a safe investment.

After evaluating the city’s financials, S&P Global Ratings reaffirmed Albuquerque’s “AAA,” the highest credit rating possible. The designation allows the city to borrow money at better rates and raises investor confidence in Albuquerque’s ability to repay municipal bonds, and especially matters for bonds taken out for infrastructure improvements.

“Steadfast stewardship of taxpayer dollars is the cornerstone of responsible government,” said Chief Financial Officer Kevin Sourisseau in a news release. “This ‘AAA’ rating affirms that trust in the city’s financial management.”

Specifically, the review assigned a “AAA” long-term rating to the city’s proposed $59.8 million series 2025A general obligation (GO) bonds and $5.3 million series 2025B GO storm sewer bonds.

S&P also gave its “AAA” rating on the city’s GO bonds that remain outstanding.

“The stable outlook reflects our view of the city’s strong management team and key role in the state’s economy, as well as our expectation that the city will adjust its budget as necessary to maintain available reserves in compliance with its fund balance policy,” the S&P report stated.

In its review of Albuquerque, S&P noted that the city faces risks from environmental factors, including drought, extreme heat and water stress.

Because the city had adopted a comprehensive climate action plan and updated it regularly, and S&P believes that the city and Bernalillo County manage and plan around the issue proactively, S&P said this qualified those risks as “neutral.”

Despite the suggestion that credit ratings are an endorsement of city management, the information is, in fact, less affirming, said Chuck Marohn, founder and president of Strong Towns.

Marohn told the Journal that municipalities like to tout these ratings via news releases and social media channels. But they don’t tell the whole story.

“(It) says little to nothing about how well the city’s being run and managed,” Marohn said. “I know cities like to put that out, saying, ‘Hey, this is a great reflection on us,’ but it’s not.”

Instead, Marohn said the rating is catered to investors, not taxpayers, and exists to demonstrate that a city could pay back debts. But the devil is in the details, Marohn said.