MOODY’S UPGRADES NEWARK’S ISSUER RATING FROM BAA2 TO BAA1; CITY’S SECOND RATING UPGRADE SINCE 2019

Mayor Ras J. Baraka today announced that Moody's Ratings upgraded Newark's issuer rating from Baa2 to Baa1, and revising the city's outlook from "Positive" to "Stable." This marks the city's second rating upgrade since 2019, reflecting a positive trajectory of Newark's financial and operational health under Mayor Baraka's leadership.

The upgrade to Baa1 recognizes that the city has achieved greater fiscal stability, with reserves holding steady without the help of extraordinary aid from the state or use of deficit financing notes. The revision of the outlook to stable incorporates that stability into a now-higher rating level.

"Moody's assessment of Newark's improved bond rating reflects the overall trend toward health in all aspects of our city life," Mayor Baraka said. "We have emerged from COVID renewed and regenerated, with robust initiatives and accomplishments in economic and housing development, and deliberate, steady, growth in corporate, retail, commerce and industry. We are stronger in job training and career opportunity, stronger in the arts and entertainment, and stronger as a unified community achieving national prominence and welcoming our future."

The Baa1 issuer rating recognizes that the city has achieved some degree of fiscal stability, with pro forma reserves (excluding a receivable for delinquent tax abatements) holding steady at around 20 percent of revenue without the help of extraordinary state aid or use of deficit financing notes. Newark's local economy remains a regionally significant aspect of the New York metro area economy and continues to grow, though the poverty rate (24.4%) is high and resident income (54.7% of the US median) is low. Leverage is higher than many peers, with Moody's-adjusted long-term liabilities at about 285 percent of revenue, though this figure continues to moderate based on better pension funding.

The city's Baa1 general obligation, lease and guaranteed ratings all reflect the unconditional pledge of the city to cover debt service, either directly through its own bonds or indirectly through lease or guaranty agreements with separate authorities.

The stable outlook incorporates a solid growth trend in the city's economy and increased stability in its balance sheet. The city's rating could climb higher should it demonstrate the ability to hold healthier reserves without resorting to extraordinary state assistance or deficit financing notes.

The city's improved rating means that Newark will benefit from lower-interest when borrowing money, such as when selling bond anticipation notes or bonds.

The principal methodology used in the issuer, general obligation, and guaranteed ratings was US Cities and Counties published in July 2024 and available at https://ratings.moodys.com/rmc-documents/425429.

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City of Newark, NJ