Moody's Upgrades Lowell's Credit Rating; $50.9M in Bonds Issued

Assistant City Manager for Fiscal Affairs Conor Baldwin announced that, after a detailed presentation to a team of credit analysts from Moody's Investor Services, the ratings agency has upgraded the City of Lowell's credit rating from 'A1' to 'Aa3.' This credit upgrade is a significant achievement for the finance team and the City, as it not only recognizes the strong financial management of the City Manager's Administration but also the enormous economic development potential on the horizon for the City of Lowell.

The work of the entire finance team, as well as the input of the Department of Planning and Development (DPD), was instrumental in demonstrating the very strong financial management at City Hall as well as the strong potential in the local economy.

The increased credit rating to 'Aa3' will have a direct financial impact on the City's budget, as the rating will help bolster competition on the sale of future general obligation debt and help earn a lower interest rate on bonds. This will reduce the City's borrowing costs for large financial obligations in the future, such as the Lowell High School construction project and the large-scale sewer separation work to be completed over the next decade.

Moody's Investor Service is among the world's most respected, widely utilized sources for credit ratings, research, and risk analysis. Moody's long-term obligation ratings are opinions of the relative credit risk of fixed-income obligations with an original maturity of one year or more. They address the possibility that a financial obligation will not be honored as promised. The 'Aa' category of their rating scale is among the highest possible rating for investment-grade obligations, and obligations rated 'Aa' are judged to be of high quality and are subject to a very low credit risk.

Prior to the latest credit upgrade, the City received competitive bids from bond and note underwriters on Wednesday, October 9, 2024, for a $50,945,000, 30-year general obligation state qualified bond issue and a $4,432,623 359-day bond anticipation note issue. J.P. Morgan Securities LLC was the winning bidder on the Bonds with an average net interest rate of 3.75%. TD Securities was the winning bidder on the Notes with a net interest cost of 3.28%.

Before the October sale date of the bonds, City Manager Thomas A. Golden, Jr., and his Administration sought approval to issue State Qualified Bonds by appearing before the Municipal Finance Oversight Board (MFOB) on August 14, 2024. The board, chaired by State Auditor Diana DiZoglio, met to consider the financial condition of the City and unanimously granted approval. Furthermore, the representative from the Massachusetts District Attorney's Office complimented the City of Lowell on its efforts to expand affordable housing.

The City received a total of 9 bids on the Bonds and 3 bids on the Notes. Bond and Note proceeds will be used to finance various municipal projects, including the $21.3 million to fund the City's local share of the Lowell High School construction project, $7.26 million in citywide paving projects, and $10.6 million in various building improvements to Lowell Public School buildings and other municipal facilities. The bonds also included, for the first time in Lowell's history, $1.5 million for the acquisition of Rollie's Farm using future commitments of the City's Community Preservation Act (CPA) surcharge revenue.

"Recent economic developments in Lowell, such as the Lowell Innovation Network Corridor (LINC) and other exciting initiatives supported by the City Council, together with the great work by the finance team to maintain solid fiscal policies and practices, have led to this credit upgrade by Moody's," said City Manager Golden. "I am so proud that Moody's has recognized the City of Lowell's strong financial management environment and budget planning strategies, which are the cornerstone of a stable and sustainable financial future for our great city. I am grateful to Mr. Baldwin and his team for the presentation they made and for all they do to keep our City finances and budget consistently well-performing."

"The whole finance team has been hard at work throughout the summer to put together the financing for this bond sale," Mr. Baldwin said. "We are pleased with the level of competition in the market and the interest rate on the sale. When we projected the debt service for the Lowell High School project, we knew that maintaining strong fiscal discipline was the most prudent way to mitigate the impact to the taxpayers and it is great to see that we have, once again, been able to obtain an interest rate lower than our projections back in 2019."

The principal methodology used in these ratings was US Cities and Counties published in July 2024, and available at: https://ratings.moodys.com/ratings-news.

Moody's Ratings upgrades the City of Lowell, MA's issuer and GOLT ratings to Aa3; assigns stable outlook: https://ratings.moodys.com/ratings-news/433074