Moody's Ratings assigns Aa1 to Fayetteville, NC S GOS

Moody's Ratings assigns Aa1 to Fayetteville, NC S GOS

Moody’s Assigns Aa1 Rating to Fayetteville, NC’s General Obligation Bonds

Moody’s Investors Service has assigned an Aa1 credit rating to the City of Fayetteville, North Carolina’s $19 million General Obligation (GO) Parks and Recreation Bonds, Series 2022. Post-issuance, the city’s total outstanding debt will reach approximately $110 million. The rating reflects Fayetteville’s “sizable tax base with significant institutional presence” and a “sound financial position,” according to Moody’s. However, the rating also accounts for a “growing but manageable debt burden,” including debt allocated to “less-essential projects,” and “below-average wealth indicators” as noted.

The bonds are secured by the city’s general obligation unlimited tax pledge, a key factor in the rating decision. Proceeds will fund capital improvement projects under the city’s Parks and Recreation Capital Improvement Program (CIP), including upgrades to the Senior Center East, a Tennis Center, and a sports complex.

Fayetteville, the sixth-largest city in North Carolina, has a population of 210,432 (2020 data), with growth exceeding 70% since 2000. The city serves as a regional economic hub and includes portions of Fort Bragg Army Base, home to approximately 57,000 military personnel and 14,000 civilian employees. Moody’s noted that while the city’s institutional tax base and financial management are strengths, rising debt levels and socioeconomic challenges could pose risks.

Factors that could lead to an upgrade include improved socio-economic indicators, reduced debt burden, or stronger reserve levels. Conversely, a downgrade could result from increased debt issuance or declining liquidity. Moody’s applied its US Local Government General Obligation Debt methodology (updated January 2021) to assess the rating.

The Aa1 rating indicates a low credit risk but underscores the need for fiscal discipline as the city manages its debt load. Investors should monitor future debt issuance and the city’s ability to maintain financial stability amid growth pressures.

Moody’s Investors Service, March 30, 2022.