City of Rio Rancho

• Issue Currency: United States of America Dollars
• Announcement Date: 19-Apr-2018
• News: Moody`s Investors Service has downgraded to Aa3 from Aa2 the City of Rio Rancho`s general obligation (GO) debt rating. Concurrently, we have assigned a Aa3 to the city`s $14.1 million General Obligation Bonds, Series 2018. RATINGS RATIONALE The downgrade to Aa3 from Aa2 is based on the city`s elevated pension burden and continued annual underfunding of pension contributions, which are outsized compared to peers. The city participates in Public Employee Retirement Association (PERA), a state-wide, cost-sharing plan. Although the city is making its statutorily-required annual payment (and is legally unable to make larger contributions), this is inadequate to prevent the unfunded liability from increasing. The Aa3 rating also incorporates the city`s large and stable tax base, which benefits from proximity to Albuquerque (GO Aa2 negative); manageable debt burden with rapid principal amortization; and, a management team that is willing to implement additional gross receipt taxes (GRT) to increase operating revenues.