Debt administration provides long term debt planning, issuance and administration in accordance with the approved capital improvement program to meet the City's capital improvement infrastructure needs.
On August 2, 2011, Moody’s Investors Service confirmed the U.S. government’s Aaa bond rating following the raising of the statutory debt limit, thus averting a possible default. However, the outlook was changed to negative. Moody’s negative outlook means there is still a risk of a downgrade. Specifically, Moody’s cited 4 risks that could trigger a downgrade in the future:
1. Fiscal discipline weakens;
2. Further spending cuts are not adopted;
3. The economy deteriorates significantly; and/or
4. There is a significant rise in funding costs
On August 4, Moody’s confirmed the Aaa ratings of 5 U.S. states and 303 other public finance issuers previously identified as having strong links to the U.S. government and like the U.S. government, these entities were also assigned a negative outlook. This includes the Commonwealth of Virginia, the City of Virginia Beach and the other Aaa-rated Virginia localities. Moody’s indicated that it will be reviewing those entities previously identified as having strong federal ties, at which time the negative outlook will be confirmed or changed to stable. In order to have a stable outlook, the credit quality of an issuer would be expected to remain higher than that of the U.S. government in the event the sovereign is downgraded by Moody’s at some point in the future.
On August 5, Standard and Poor’s downgraded U.S. debt to AA+, with a negative outlook. State and local governments are rated independently of the sovereign debt, so it is possible for them to retain their AAA ratings in spite of the downgrade. The fiscal autonomy, political independence and generally strong credit culture of U.S. state and local governments can support ratings above that of the U.S. sovereign according to S&P.