A change in credit rating for the town of Normal.
BLNNews.com reports that Fitch Ratings, the smallest ratings agency, has always been the only one to have Normal at AAA. On August 12th they downgraded Normal to AA. That is a huge drop – skipping over AAA- and AA+.
Fitch Ratings – Chicago – 12 Aug 2024: Fitch Ratings has downgraded the following Normal, IL ratings to ‘AA’ from ‘AAA’:
–Issuer Default Rating (IDR);
–Outstanding general obligation (GO) bonds.
The Rating Outlook is Stable. The ratings have been removed from Under Criteria Observation.
VIEW ADDITIONAL RATING DETAILS
The downgrade of Normal’s IDR and bond ratings to ‘AA’ from ‘AAA’ reflects the implementation of Fitch’s new “U.S. Public Finance Local Government Rating Criteria.” The rating change reflects the town’s above-average long-term liabilities assessment, which are assessed as ‘weak’ when compared to Fitch’s local governmental ratings portfolio.
The rating also incorporates the town’s ‘midrange’ economic, and demographic (E&D) trend metrics partially offset by a declining population trend and ‘weak’ economic concentration metric due primarily to a heavy presence of financial services related personal income when compared to national levels. Fitch’s new criteria places a heavier emphasis on E&D metrics than compared to its prior criteria.
The rating also incorporates the town’s ‘aaa’ financial resilience assessment given a ‘high midrange’ level of budgetary flexibility and Fitch’s expectations that unrestricted general fund reserves will be maintained at least equal to or greater than 10.0% of total general fund spending (the minimum level required for a ‘aaa’ assessment). Unrestricted general fund reserves have exceeded 40% of spending since at least fiscal 2012.
Rating Sensitivities
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
–A decline in unrestricted general fund reserve levels to below 10.0% of spending and transfers out, which would lower Fitch’s assessment of financial resilience to below ‘aaa’;
–An approximately 20% increase in long term liabilities and carrying costs assuming current levels of personal income and governmental revenues and spending.
BLNNews.com‘s Diane Benjamin reported, “It looks to me like long term debt caused the downgrade and Fitch changing how they do ratings. Remember when I warned you the Uptown TIF revenue wasn’t going to pay off the bonds before it ended?”
Bloomington now appears to have a higher Fitch rating than Normal: AA+
