Newark Gets Upgrade From Moody’s, Improves ‘Fiscal Stability’

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Newark Gets Upgrade From Moody's, Improves 'Fiscal Stability' Newark Mayor: "We have emerged from COVID renewed and regenerated."

NEWARK, NJ — The City of Newark has received a vote of increased confidence from Moody's Ratings, officials announced Monday.

Moody's has upgraded Newark's issuer rating from Baa2 to Baa1, and revised the city's outlook from "Positive" to "Stable." This marks the city's second rating upgrade since 2019.

"The upgrade to Baa1 recognizes that the city has achieved greater fiscal stability, with reserves holding steady without the help of extraordinary aid from the state or use of deficit financing notes," city officials stated in a news release.

"The revision of the outlook to stable incorporates that stability into a now-higher rating level," officials added.

"Moody's assessment of Newark's improved bond rating reflects the overall trend toward health in all aspects of our city life," Mayor Ras Baraka said.

"We have emerged from COVID renewed and regenerated, with robust initiatives and accomplishments in economic and housing development, and deliberate, steady, growth in corporate, retail, commerce and industry," Baraka added. "We are stronger in job training and career opportunity, stronger in the arts and entertainment, and stronger as a unified community achieving national prominence and welcoming our future."

What does the improved rating mean for Newark? For one, the city will benefit from lower-interest when borrowing money, such as when selling bond anticipation notes or bonds, officials pointed out.

Officials said that other notable details include:

"The Baa1 issuer rating recognizes that the city has achieved some degree of fiscal stability, with pro forma reserves (excluding a receivable for delinquent tax abatements) holding steady at around 20 percent of revenue without the help of extraordinary state aid or use of deficit financing notes. Newark's local economy remains a regionally significant aspect of the New York metro area economy and continues to grow, though the poverty rate (24.4%) is high and resident income (54.7% of the US median) is low. Leverage is higher than many peers, with Moody's-adjusted long-term liabilities at about 285 percent of revenue, though this figure continues to moderate based on better pension funding."

"The city's Baa1 general obligation, lease and guaranteed ratings all reflect the unconditional pledge of the city to cover debt service, either directly through its own bonds or indirectly through lease or guaranty agreements with separate authorities."

"The stable outlook incorporates a solid growth trend in the city's economy and increased stability in its balance sheet. The city's rating could climb higher should it demonstrate the ability to hold healthier reserves without resorting to extraordinary state assistance or deficit financing notes."

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