Dallas's Credit Rating Cut by Moody's Over Growing Pension Debtby
Moody's downgrade affects $1.7 billion of securities
Backlog of infrastructure needs also cited in rating cut
Dallas’s credit rating on $1.7 billion of general-obligation debt was lowered by Moody’s Investors Service because of the city’s growing pension-fund deficit and the backlog of spending needed on its infrastructure.
The New York-based company lowered the city’s rank by one level to Aa2, the third-highest investment grade. The outlook is stable, signaling that no further changes are imminent.
The downgrade comes after the city’s unfunded liabilities to its three pension systems swelled to $2.9 billion in 2015 from about $1.9 billion in 2014, following a reduction to its estimate for the investment gains it counts on to cover future retirement checks.
Moody’s said that shortfall is expected to grow because of legal and political obstacles to that prevent it from putting more tax money into the retirement system.