Another major ratings house downgraded the City of New Orleans’ credit this week, signaling widening concern among investors about the city’s financial stability. The Fitch Ratings downgrade on Wednesday follows a similar action in October by Moody’s Ratings, which cited a structurally imbalanced city budget, economic headwinds and other factors.
Despite the downgrades, Fitch and Moody’s both continue to rate the city’s bond issuances as worthy of investment, though they are also warning of future downgrades if the city doesn’t improve its fiscal management.
New Orleans now rates an “A-” on Fitch’s scale, meaning the city is seen having a strong ability to meet its financial commitments, but could “be more vulnerable to adverse business or economic conditions,” according to Fitch’s website. Any additional downgrade would drop the city into Fitch’s middle tier, where the risk of default increases…