Kroll Bond Rating Agency upgraded Nashville’s credit this week, lifting the city’s bond rating to AA+ from a previous rating of AA. This week’s upgrade brings Nashville just one step below a perfect AAA rating from Kroll.
The move comes weeks after Nashville adopted new financial management practices that increase its cash reserves and ahead of $650 million in bond issuances expected by Kroll in late 2024. Projected borrowing over the next few years associated with East Bank infrastructure, a new Titans stadium and a renovated NASCAR track could reach $1.3 billion total. The city’s current debt profile includes $3.5 billion in general obligation bonds and almost $1 billion in liabilities from “Metro-backed entities,” like debt issued by the Metro Sports Authority and the revenue bonds behind Music City Center.
A brief economic profile of the city accompanied Kroll’s announcement, which was officially dated Feb. 3. The announcement includes a Feb. 6 acknowledgment of the rating change signed by Nashville City Treasurer Michell Bosch. Kroll praises Nashville for a diverse economy, steady population growth and a strong property tax base. The agency attributes its upgrade to “recently augmented reserves which were further buttressed by a strengthened reserve policy,” an apparent nod to legislation passed in January that requires the city to maintain cash reserves at or above 17 percent of its operating costs. The policy aligns with recommendations from state and local finance officers and passed with broad support from Metro councilmembers and Mayor John Cooper. Agencies, including Kroll, ding the city for subsidizing Nashville General Hospital.
Nashville has an AA2 rating with Moody’s, two notches off its top mark. Kroll’s upgrade comes during a push by state lawmakers to cut tax revenue streams that support Music City Center debt. Such a move could jeopardize the city’s financial standing.
