Nashville, Tennessee received a series of upgrades from S&P Global this week.
The credit agency on Monday boosted Metropolitan Nashville and Davidson County’s long-term general obligation debt rating to AA+ from AA. The upgrades also apply to obligations supported by its non-tax revenue. The outlook is stable.
The action reflected Nashville’s efforts to “strengthen its financial position and enhance certain financial management practices and policies, helping ensure that recent improvements are sustained,” S&P said. “The rating action also reflects our view of Nashville’s diversified and rapidly growing economy.”
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The city was staring down a $41.5 million budget shortfall in 2019, prompting calls for a state takeover of the city’s worsening finances.
Elected in September of that same year, Nashville Mayor John Cooper worked to cut costs and open up new revenue streams, presenting a plan approved by state officials that relied on payments in lieu of taxes and savings from cuts to other city departments to bridge the budget gap.
The upgrades come two months after Kroll Bond Rating Agency assigned Nashville an AA+ issuer rating. Moody rates Nashville an equivalent Aa2.
“Just four years ago the state comptroller cautioned that Metro’s financial status was unsustainable and warned of a state takeover,” Cooper said in a statement. “My administration made Metro’s financial health a priority and I am pleased to see others acknowledging our ongoing efforts. Now, Metro is financially stable, has a structurally balanced budget, and enjoys the largest reserves ever.”
S&P also upgraded the long-term rating on several series of bonds to be issued by the city’s Sports Authority in support of the construction of a new stadium for the NFL’s Tennessee Titans. A bond resolution clearing the stadium bond sale heads to the Sports Authority Board for approval next week, with pricing expected to occur in early August.
Senior lien Series A, with a preliminary par amount of $347.9 million, and Series B, with a preliminary par amount of $75.5 million, were both upgraded to A from A- with outlook stable, reflecting S&P’s view of the project’s “strong-to-adequate economic fundamentals and moderate-to-high revenue volatility.”
S&P also assigned a AA+ long-term rating with stable outlook to two additional series of stadium bonds; federally taxable Series C, with a preliminary par amount of $35.1 million, and Series D, with a preliminary par amount of $244.9 million.
Principle and debt service on the stadium bonds will be covered in part by a sales tax redirect that would use sales taxes collected in the stadium and on the stadium campus for the duration of the bonds.
The Titan’s owners have also said they’ll commit around $700 million of funding to the project.