Moody's Investors Service has affirmed the City of Las Cruces’ Aa2 general obligation (GO) rating and has removed a negative outlook.
Moody’s rating was announced in a July 1, 2021, news release it issued. The city has $27.5 million of outstanding General Obligation (GO) debt.
Las Cruces voters approved $35.6 million in General Obligation bonds in August 2018 for parks and sports fields improvements and additions; a new animal shelter facility; construction of a new Fire Station 3, at 390 N. Valley Drive; and improvements for walking, jogging, biking and recreational trails. The status of GO Bond projects can be found online at: https://www.las-cruces.org/1892/General-Obligation-Bond-Projects.
Ratings Rationale
The affirmation of the Aa2 rating reflects the city's healthy financial position despite recent one-time draws in reserves, with year-to-date results showing a surplus in Fiscal Year 2021. The city also benefits from its large and diverse economy, anchored by New Mexico State University (A1 stable) and White Sands Missile Range, with a below-median debt burden. The rating further incorporates the elevated pension burden and fixed costs relative to similarly rated peers. Moody’s removal of the negative outlook reflects its expectation that the city's financial position will remain stable in the near term, with an expected surplus in the city’s Fiscal Year 2021.
Legal Security
The bonds are general obligations of the city payable from ad valorem taxes, which may be levied against all taxable property within the city without limitation as to rate or amount. The bonds are payable via the obligation of the city to levy and collect upon all taxable property within the city a tax rate levy sufficient, together with other legally available revenues, to pay the debt service on the bonds.