Ratings for San Diego's long-term bond issues were raised today from A- to A+ by the credit rating agency Standard & Poor's, which cited improved forecasting practices and budget adjustments.
The credit rating agency also boosted the city's main rating two notches, from A to AA-.
The upgrade "reflects our view of improvements the city has made on its internal controls and processes, disclosure practices and financial systems over the previous few years that officials believe should contribute to the future continued transparency, timeliness and accuracy of its financial statements,'' S&P's report states.
The city of San Diego was knocked out of the bond market for several years in the last decade when questionable disclosure practices were investigated by the Securities and Exchange Commission. When the city was able to issue bonds again, its ratings were soured by the impact of the recession and structural budget deficit.
S&P, which gave a "stable'' outlook for the bonds, noted that the city's revenues are increasing and that it will have solid budget reserves into the future and has strong financial management practices.
"This is just another positive sign from Wall Street regarding our efforts to strengthen San Diego's financial fitness,'' said Mayor Jerry Sanders. "Because of the work of so many people -- from the city's management team to the city council -- the city is in much better shape today than it has been in years.''
The agency said the city's financial strengths are tempered by its pension liability and limited flexibility to raise revenues.
Even if the city went to the bond market for all its upcoming capital projects, like expanding the Convention Center, clearing its $800 million backlog of street and public facility repairs and building a parking garage in Balboa Park, the city's debt burden would only be moderate, according to the agency.
S&P wrote that it was unlikely to consider raising the rating again for about two years, but could lower it if the city failed to maintain its high level of reserves.
