City of Montgomery may see downgrade of credit rating - Montgomery Alabama news.

City of Montgomery may see downgrade of credit rating


The City of Montgomery is under review and could see its credit rating downgraded. The downgrade's effect would be on interest rates.

If the city's credit rating goes down, it may have to pay a higher interest rate. Also, the value of the bonds the city already owns could go down.

Moody's Investor Service initiated the review of the state's capital city saying the city of Montgomery has relied on a bank line of credit for an extended period of time and has not been able to make its budget projections for several cycles.

Those reason were among several that Moody's offered for the reason it's placing the city in review. Moody's also cites a deteriorated reserve fund and a shortage in funding medical insurance as reasons for the review.

Montgomery's director of finance does not expect to see the rating downgraded. Lloyd Faulkner says Montgomery is making a come-back.

"It's not been easy, but we've been fortunate, and the city of Montgomery is on the upswing, doing well," Faulkner says. "You know that line is not curving straight back up, it's pretty slanted, but we're on the way back."

The city's current credit rating is Aa2, the third highest rating available.

Moody's expects its review to take about 60 days.

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