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Norwalk officials warned reserves must hold as debt approaches $650 million capacity
Summary
Munistat told Norwalk’s Finance and Claims Committee and BET that while the city retains AAA headline ratings from Moody’s and S&P, weakening reserves in FY25 and rising debt (current $439M principal plus $102M authorized-but-unissued) mean the city must preserve or rebuild fund balance to avoid losing the notch that supports AAA status.
Norwalk City officials heard a Munistat presentation on Feb. 24 that laid out how Moody’s and Standard & Poor’s score municipal credit and warned that weakened reserve levels could jeopardize the city’s AAA headline ratings as debt rises.
Bill Lindsey, the city’s municipal financial advisor for debt issuance, said Moody’s weights economy, financial performance and leverage at 30% each and institutional framework at 10%, while S&P places greater emphasis on financial performance and reserves. He told the joint Finance and Claims Committee and Board of Estimate and Taxation that the city’s headline AAA ratings rest on historically strong liquidity, reserves and well-funded pension and OPEB accounts, but those offsetting strengths must be maintained as debt increases.
"We were able to increase that debt capacity number to $650 million," Lindsey said, explaining that the city’s modeled general-fund principal outstanding…
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