City of San Diego Credit Boosted by Fitch Ratings Due to Strong Local Economy, Demographics

Fitch Ratings upgraded San Diego’s credit ratings, deeming the city’s outlook “stable” while citing its fiscal management capabilities and policies. 

The upgrade reflects the implementation of Fitch’s new U.S. Public Finance Local Government Rating Criteria, which places more emphasis on demographics and economics and a municipality’s role in the regional and national economy.

“The city views these upgrades by Fitch as positive reinforcement of the city’s approach to its continued commitment to providing high-quality financial services with integrity, transparency and accountability for the public,” said Department of Finance Director and City Comptroller Rolando Charvel.

Fitch Ratings range from AAA, the best credit, down to D.

On June 25, Fitch upgraded the city’s Issuer Default Rating from “AA” to “AA+.” In addition, Fitch upgraded its ratings on all of the city’s outstanding Lease Revenue Bonds, including the upcoming Series 2024A bond issuance, from “AA-” to “AA” with a “stable” outlook.

The Series 2024A bonds, to fund capital improvement projects, are expected to go out later this month. Fitch also upgraded the Water Infrastructure Finance and Innovation Act loan for stormwater improvements and the city’s General Fund Commercial Paper Notes ratings from “AA-” to “AA” with a “stable” outlook.

In its report, Fitch cites the city’s strong demographic and economic levels and recognizes its role as the center of an important and large metropolitan area with a vital role in the national economy.

The “stable” outlook reflects Fitch’s expectation that the city’s fiscal management and policies sufficiently mitigate the potential risks over the medium term as officials adjust to slower revenue growth, rising salary and benefit expenses and increased capital needs.

Founded in 1914, Fitch Ratings Inc. is a nationally recognized organization designated by the U.S. Securities and Exchange Commission.