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Cedar Rapids Receives Aa1 Bond Rating on General Obligation Debt

Cedar Rapids Receives Aa1 Bond Rating on General Obligation Debt

April 29, 2022

The City of Cedar Rapids is pleased to announce that Moody’s Investors Service has assigned a Aa1 rating to the City’s $51.7 million General Obligation Bonds, Series 2022A and $3.7 million Taxable General Obligation Bonds, Series 2022B. The Aa1 rating indicates the bonds are judged to be of high quality and are subject to low credit risk. The outlook on the general obligation rating is stable, reflecting Moody’s expectation that the City’s healthy financial profile will be maintained and its long-term leverage will remain manageable. Moody’s maintained a Aa1 rating on the City’s previously issued general obligation unlimited tax debt.

Moody’s conducts a rigorous analysis of the finances and general management of the operations for cities across the United States. These ratings are used as a measure of confidence in the city governance upon each issuance of bonds. In addition to finances and general management, Moody’s takes into account the overall economic health of the city, including major employers, local residential, commercial and industrial construction, unemployment and other economic indices. Moody’s recognized that the city’s overall operations saw minimal impact from the pandemic and expects to end fiscal year 2022 with a surplus.

The Aa1 rating incorporates the City’s large tax base and its role as an economic hub in Eastern Iowa. The rating reflects the City’s strong fund balance and liquidity, supported by prudent management and ample revenue raising flexibility. The stable outlook on the GO rating reflects Moody’s expectation that the City’s healthy financial position will be maintained and its long-term debt and pension obligations will remain manageable.

“The City’s financial management practices have allowed the City to maintain a strong financial profile and reinvest in capital improvement projects that are important to its citizens. This rating from Moody’s demonstrates the City can maintain solid financials and at the same time get projects done.” said Casey Drew, Director of Finance for the City of Cedar Rapids.

Moody’s also assigned Aa2 ratings to the City’s $4.8 million Sewer Revenue Bonds, Series 2022C and $8.1 million Water Revenue Bonds, Series 2022D. Moody’s maintained the Aa2 rating on the City’s previously issued water and sewer revenue debt. Repayment of these bonds is secured by the City's sewer utility and water utility systems.

The Aa2 sewer and water revenue ratings reflect the systems’ strong debt service coverage and ample liquidity supported by its unlimited rate setting authority. The rating also incorporates the systems’ large size, moderate debt burden and significant concentration among top customers.

To view the full report, visit www.moodys.com/researchandratings.

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