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Newton discusses credit rating with Moody's

Posted by Leslie Anderson  August 1, 2011 08:10 PM

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Moody’s Investors Service will review Newton’s AAA bond rating in the next 90 days because of the potential national default facing the country, Mayor Setti Warren said tonight after a conference call with Moody’s.

“Moody’s informed us that as a result of what’s happening in Washington -- the fact that there is not a deal in place to raise the debt ceiling at this point – the credit rating of the United State’s government could be in jeopardy, therefore communities with a AAA bond rating will be under review in the next 90 days,” said Warren.

The House of Representatives approved a deal tonight to avoid financial default, with a vote in the Senate expected Tuesday, potentially ending months of bipartisan bickering. Moody’s told Warren they would keep communities updated, based on what happens in Washington, as to whether the review will still be necessary, Warren said.

“Gambling with our nation’s credit rating is unacceptable,” Warren, a US Senate candidate, said earlier today. “This brinksmanship is putting communities at risk all over the country.”

Warren said he told Moody’s that the city is fiscally strong, regardless of what federal lawmakers come up with by tomorrow.

“I emphasized our strong financial position, our strong tax base,” said Warren. “We do not have a significant amount of federal tax dollars that we depend on in our budget.”

Moody’s told the Globe last week that it is reviewing the credit ratings of 162 local governments in 31 states that could be affected if the federal credit rating is downgraded.

Moody’s said it is focused on cities and towns with the highest credit ratings, as part of a preliminary look at how a federal default could affect the wealthiest communities. A lower credit rating could raise the cost of borrowing for cities like Newton.

Warren said the city could lose millions as a result, and a lower credit rating could jeopardize the city’s capacity to do “critical infrastructure work,” he said.

Material from the Associated Press was used in this report. Lisa Kocian can be reached at lkocian@globe.com.

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