City bond rating not what it appears: Letters to the Editor
El Paso Times, Published 6:00am MT May 12, 2023
“Terrell Blodget wrote to this newspaper claiming the recent bond rating “increase” to AA+ by the Kroll Bond Rating Agency is evidence of “the city’s careful stewardship of taxpayer monies.”
First, KBRA is not one of the Big Three bond rating firms that set the industry standard. In fact, hardly anyone has heard of them. The WSJ reports that in 2020 they were fined $2 million by the SEC “for violating rules to make credit ratings accurate.”
Second, KBRA has never rated our city’s debt before so there is no “increase” from a previous rating. Each rating agency has its own metrics so it is hard to quantify what a AA+ from KBRA even means.
But what about the Big Three? It so happens that Fitch just reaffirmed its AA rating on our city’s GO debt for the first time since 2014, but assigned a lower rating (AA-) to the $62 million in outstanding debt on our ballpark. Meanwhile, Standard & Poor’s has maintained a AA rating since 2013. Moody’s Aa3 rating has been in place since 2009, but they did warn us in December 2019 that in the event of a serious recession, El Paso will be one of four cities in which “adjusted net pension liabilities will rise by more than 100% of revenue.”
Yet, the City gleefully told the media about the KBRA rating, which is a nothingburger without any beef, cheese, or ketchup. Apparently Mr. Blodget ordered one to go, along with a gallon of Kool-Aid.
Max Grossman
West El Paso”
*The last sentence has been deleted by the El Paso Times, so we re-added it here.