ST. LOUIS — S&P Global Ratings has revised the bond outlook for the city of St. Louis from “stable” to “negative” citing the city’s projected revenue decline due to COVID-19 and population loss.
The “negative” outlook means there is a one in three chance that the rating could be lowered within the outlook period, S&P said.
"The outlook revision reflects our view that the projected drop in key revenues due to economic restrictions imposed as a result of the COVID-19 pandemic will materially limit the city's ability to maintain structural balance within the current and following fiscal years," said S&P Global Ratings Credit Analyst John Kenward in a statement.
The rating could drop if COVID-19 continues to devastate the city’s convention and tourism sectors as well as earnings and payroll taxes, S&P said. However, if the city is makes adjustments to maintain balanced operations and strong reserve levels, the agency would revise the outlook to “stable.”
On the positive side, the ratings agency affirmed its “A+” long-term rating on the city’s general obligation bonds and its “A” long-term rating on its appropriation debt.
Comptroller Darlene Green said the ratings recognize work to improve the city’s financial position.
“Over the past several years, the City of St. Louis has realized a sustained, positive fiscal trajectory by managing expenses, developing diverse revenue streams, and building up its reserve funds,” said Green in a release.
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