AUSTIN, Texas — Austin has become the only major Texas city to earn the highest possible credit rating from the nation’s three leading credit rating agencies, a milestone that could lower borrowing costs as the city prepares to finance major infrastructure projects.
Moody’s Ratings upgraded Austin’s overall credit rating and general obligation debt rating from Aa1 to Aaa, according to a memo sent Friday to the mayor and City Council. The city already held top-tier AAA ratings from S&P Global Ratings and Fitch Ratings.
Credit ratings measure a government’s ability to repay debt. Higher ratings generally reduce borrowing costs by signaling lower risk to investors.
The Moody’s upgrade also applies to Austin’s general obligation debt, along with debt backed by hotel occupancy taxes, the city’s water and wastewater system and annual city appropriations.
Moody’s cited Austin’s large and diversified economy, driven by state government, the University of Texas and continued technology-sector growth. The agency also pointed to rising city revenues, prudent financial management and efforts to reduce long-term pension and retiree health care liabilities.
Austin is expected to take on significant new debt to expand Austin-Bergstrom International Airport, redevelop the Austin Convention Center and upgrade water and wastewater infrastructure. Moody’s said each project has a dedicated revenue source to support repayment.
The agency assigned Austin a stable outlook, indicating it expects the city to maintain its strong financial position as debt levels increase.