Moody's Investors Service upgraded Bridgeport, Conn., general obligation debt to Ba from B yesterday in response to the city's efforts to regain fiscal stability.
The rating change affects about $64.6 million of outstanding city GO bonds, the agency said in a release.
Moody's also raised the rating on $28 million of state-supported GO bonds to A from Ba. Other outstanding bonds include $98.4 million of AAA-rated insured bonds.
The agency said the upgrade also will apply to the city's planned sale of $6.9 million of bonds that would be backed by a special state fund.
Mayor Joseph P. Ganim said the upcoming bond sale will be used to defease certain city-issued bonds to lower Bridgeport's debt service.
Joan Dougherty, senior analyst at Moody's, said the agency based its decision on several factors, including the city's decision last November to abandon a bankruptcy filing, as well as Tuesday night's sale of city-owned park lands.
The rating agency also upgraded the city because it believes a long-term financial plan structured by the major's office in conjunction with the city's financial review board and Gov. Lowell P. Weicker's office is fiscally sound, according to the release.
"I can't say enough about the statewide efforts responsible for Bridgeport beginning its return to stability," Mr. Ganim said. "The governor's office and the financial review board have been able to structure a long-term plan that is for the benefit of all the residents of the city."
Although the upgrade is an encouraging sign for the city, the Ba rating still suggests the Bridgeport has a long way to go.
"There are still some chronic problems the city has to address," Ms. Dougherty said. "The city's unemployment rate, the lower income of its tax base, the recession, and the city's difficulty in collecting property taxes still work against the city."
While Moody's also cited the city's persistent problems with labor unions, Ms. Dougherty said the rating clearly reflects the city is on the right track.
Mr. Ganim, who said the influx of industry in Bridgeport has also been particularly encouraging, said Tuesday evening's sale of city land "put us over the top."
"Tuesday's land sale will add an additional $5.9 million to the city's pocketbook," he said.
"When I think of the state Bridgeport was in when I took office, today is an extremely fulfilling day," Mr. Ganim said. "We have had to make difficult, often very painful, budget decisions."
Last year, Bridgeport became the first major city in the nation to apply for the newly created municipal bankruptcy protection program known as Chapter 9. A federal judge rejected the city's claim, which was filed by then-Mayor Mary C. Moran.
Ms. Moran lost the mayoral election last November, and Mr. Ganim rescinded the city's appeal for the protection when he took office.
The decision not to appeal the judge's ruling "was a major move for the city," Ms. Dougherty said. She said the agency did not consider the bankruptcy protection "to be a viable option for the city."
Last Friday, Standard & Poor's Corp. raised the city's rating to BB from CCC and removed the city from CreditWatch with negative implications.