Hennepin County Officials Criticize Moody's After Bond Rating Threat

Hennepin County Board Chairman Mike Opat is pushing back against Moody's Investors Service after the national bond rating agency threatened to downgrade the county's top-rated bonds without providing proper notice. The county's ranking is currently AAA, one of the highest ratings possible. Opat expressed concerns that the county's good name in the financial markets has been damaged and that citizens and investors are needlessly concerned due to a lack of explanation from Moody's. The bond review was triggered by the debt-ceiling crisis in Washington, which has left many jurisdictions vulnerable to economic fluctuations. Moody's has since halted the review process, but retained the current bond ratings, although it tagged the United States and local jurisdictions with a "negative outlook", implying a risk of credit downgrades in the next couple of years.

Key Takeaways:

• Hennepin County Board Chairman Mike Opat criticized Moody's for threatening to downgrade the county's top-rated bonds without proper notice.
• Opat expressed concerns that the county's good name in the financial markets has been damaged and that citizens and investors are needlessly concerned.
• Moody's initiated the bond review in response to the debt-ceiling crisis in Washington, citing the county's dependency on federal revenues, reliance on capital markets, and sensitivity to overall economic cycles.
• The bond review included nearly a dozen AAA-rated local governments and school systems in Minnesota, including Hennepin and Ramsey counties, Minneapolis, Wayzata, and Edina schools.
• Moody's has since halted the review process, but retained the current bond ratings, with a "negative outlook" for the United States and local jurisdictions.
• Opat questioned why Moody's included the county's rail authority and ballpark bonds in its review, citing the bonds are mostly backed with property taxes and rely on a 0.15% sales tax for revenue.

Statistics:

• 177 jurisdictions nationwide, including nearly a dozen AAA-rated local governments and school systems in Minnesota, were under review by Moody's.
• The review was triggered by the debt-ceiling crisis in Washington.
• The jurisdictions under review were chosen due to their dependency on federal revenues, reliance on capital markets, and sensitivity to overall economic cycles.
• Moody's retained the current bond ratings for the jurisdictions under review, but tagged the United States and local jurisdictions with a "negative outlook", implying a risk of credit downgrades in the next couple of years.
• 0.15% sales tax for the ballpark bonds.

Sources:

• Hennepin County Board Chairman Mike Opat's letter to Moody's Investors Service (exact mention in the original text)
• Kevin Duchschere - 612-673-4455 (no external reference provided)