Metro has stopped using Fitch Ratings to grade the city’s credit, leaving Davidson County with only two of the nation’s big three credit agencies to rate its bonds issuances.
Metro Finance Director Rich Riebeling said Thursday the city has turned to Standard & Poor’s and Moody’s Investor Service to rate Metro’s last few bond issuances, but not Fitch, which he said isn’t worth the cost.
“We just found they were not as good as the other two, and that the bond holders really just want to see Moody’s and S&P,” Riebeling said. “Fitch is sort of the third, and by far the smallest, of the rating agencies.”
“We were spending a lot of money on ratings, and we didn’t think it did anything to bring any value to our bonds,” he said.
Riebeling said the fee Metro paid to Fitch for each bond issue ranged between $50,000 to $100,000.
According to Riebeling, when Mayor Karl Dean arrived in office in 2007, Metro only used Moody’s and S&P. The finance director said he started using all three rating agencies “thinking it might be in our best interest.”
The city opted to end its participation with Fitch in recent months.
In a Fitch press release Thursday, the agency confirmed that decision: “Fitch has withdrawn the ratings as the county has chosen to stop participating in the rating process.”
Though Fitch withdrew its Metro ratings, the credit agency also said it “simultaneously affirms” ratings that it had placed on the city in the past. They are:
• An AA for approximately $1.9 billion general obligation (GO) bonds
• An AA- for approximately $59 million district energy system revenue bonds, series 2002
• An AA- rating on the Metro Convention Center Authority approximately $419 million subordinate tourism tax revenue bonds, series 2010B [bonds used to fund Nashville’s Music City Center]
• An AA- rating on approximately $204 million of outstanding tourism tax revenue bonds of the authority, series 2010A. [bonds used to fund Nashville’s Music City Center]
In February 2011, Fitch downgraded $210 million in outstanding Metro Water and Sewer revenue bonds from AA to AA-, with the agency citing “a rapid escalation in planned capital spending.”
After the downgrade, Riebeling downplayed its significance, calling the score a “solid rating.” He also pointed to Fitch itself.
“Fitch is taking a very conservative approach to municipal governments, in general,” Riebeling said last year. “It’s much more aggressive in terms of looking at downgrading.”