1:10pm | A global credit-rating agency has affirmed its rating on two different sets of Long Beach lease revenue bonds and stated the the rating outlook is stable.

Fitch Ratings announced Monday afternoon that two series of lease revenue bonds issued by the city of Long Beach are rated at AA-, or “high grade.” They are the Long Beach Bond Finance Authority, series 1998B (Temple and Willow Facility) and the Southeast Resource Recovery Facility Authority, series 2003A an B bonds.

Credit ratings assess the creditworthiness of corporate or government debt issues and are used by investors of debt securities such as bonds. The ratings represent the quality of a bond. 

“In addition, Fitch assigns an implied general obligation rating at AA,” the announcement reads. “Long Beach has no outstanding GO debt.”

The following were among the key rating drivers Fitch listed in its announcement:

  • The ratings reflect the city’s diversified local economy, history of generally balanced financial performance and maintenance of adequate reserves, a low to moderate debt burden, and Fitch’s expectation that management will focus on closing projected operating deficits.
  • The lease revenue bonds’ rating reflects the general credit characteristics of the city as well as the standard security features supporting the bonds.
  • The economy benefits from the city’s proximity to labor markets of Los Angeles and Orange County as well as local economic developments, although it remains stressed with elevated unemployment rates and below-average income levels.
  • The city’s tax base is large and diverse and retained most of its value despite moderate declines in assessed values over the past two fiscal years.
  • Overall net debt levels for the city are moderate with average principal amortization rates.
  • The city’s financial position weakened in fiscal 2010, in part due to a transfer of property tax revenues to the state required by Proposition 1A. Reserves remain satisfactory and the city projects balanced financial performance in fiscal 2011 with no additional draw on the General Fund’s unreserved balance.
  • Management retains options for reducing expenditures, although high fixed costs and several years of cuts have left the city with few choices that do not impact current service levels.
  • The city’s fixed carrying costs for long-term liabilities is above average largely due to pension payments on behalf of union employees.

Both series of lease revenue bonds are secured by lease payments that are subject to annual appropriation by the city. The leased asset for the 2003A and B bonds is the Southeast Resource Recovery Facility, while the leased asset for the 1998B bonds is the refuse facility and the West Long Beach Police Station, according to Fitch.