Savannah, TN GO Ratings Raised To 'AA-' On Improved Economy And Stable Finances

CENTENNIAL (S&P Global Ratings) Feb. 4, 2019--S&P Global Ratings raised its 
long-term rating and underlying rating (SPUR) to 'AA-' from 'A+' on Savannah, 
Tenn.'s existing general obligation (GO) debt. The outlook is stable. 

"The upgrade reflects our assessment of the city's improved economy, driven by 
a material decrease in the unemployment rate due to various retail and 
commercial developments," said S&P Global Ratings credit analyst Joyce Jung. 
"While the city intends to use a portion of available reserves to fund 
one-time capital projects in fiscals 2019 and 2020, we expect the budgetary 
performance to remain stable and reserves to remain very strong for the next 
two years." 

The GO ratings reflect our assessment of the following factors for the county, 
specifically its:

  • Weak economy, with market value per capita of $61,742 and projected per capita effective buying income at 70.0% of the national level;
  • Adequate management, with standard financial policies and practices under our Financial Management Assessment methodology;
  • Adequate budgetary performance, with operating results that we expect could deteriorate in the near term relative to fiscal 2017, which closed with operating surpluses in the general fund and at the total governmental fund level;
  • Very strong budgetary flexibility, with an available fund balance in fiscal 2017 of 76% of operating expenditures;
  • Very strong liquidity, with total government available cash at 100.0% of total governmental fund expenditures and 45.0x governmental debt service, and access to external liquidity we consider strong;
  • Strong debt and contingent liability profile, with debt service carrying charges at 2.2% of expenditures and net direct debt at 37.5% of total governmental fund revenue; and
  • Very strong institutional framework score.
The stable outlook reflects our expectation that the city will maintain 
adequate budgetary performance, very strong flexibility, and very strong 
liquidity for the next two years. Therefore, we do not expect to change the 
ratings over the two-year outlook horizon. 

We could raise the ratings if the city's tax base experiences material growth, 
boosting its wealth and income metrics to levels comparable with those of 
higher-rated peers, and if the city formalizes key management practices and 

We could lower the ratings if the city's budgetary performance were to 
deteriorate, leading to a substantial or sustained decline in reserves.
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