‘Negative outlook’ for Greensboro and Winston-Salem credit
Like the US government, the cities of Greensboro and Winston-Salem still hold the highest credit rating — AAA, which allows the local government to borrow at the lowest possible interest rates. Moody’s Investors Services confirmed the United States’ AAA rating on Aug. 2, but assigned it a negative outlook. Two days later, according to a memo from Greensboro Finance Director Rick Lusk to his boss, City Manager Rashad Young, Moody’s followed suit by assigning a negative outlook to five states and 302 other public finance issuers, including the cities of Greensboro and Winston-Salem and the counties of Guilford, Mecklenburg, Wake, Durham and New Hanover.
“Within the next 90 days, Moody’s will conduct an assessment of each AAA issuer’s vulnerability to macroeconomic sensitivity, market risk and exposure to federal spending reductions, as well as our level of financial reserves,” Lusk wrote. “If they determine that we possess characteristics that do not make us vulnerable to a US government downgrade, our outlook will be moved back to stable. Otherwise, it will remain negative.”
Lusk said the city of Greensboro has $447 million in bonded debt obligations.
The city of Winston-Salem has $95 million in general obligation debt.
“In terms of the city of Winston-Salem, we feel strongly that we are AAA-warranted,” Finance Director Denise Bell said. “The expectation is that we will move from the negative to the stable outlook. We have been told by Moody’s that they will be talking to individual governments to look at their individual circumstances to make a determination.”
Bell said she was uncertain what effect the negative outlook might have on the cost of debt service, but said she considers it a temporary status.