Birmingham, Alabama, upgraded to AA from AA-minus by Fitch

Birmingham, Alabama's issuer default, general obligation bond and warrant rating was upgraded to AA from AA-minus by Fitch Ratings on Wednesday, which cited improved long-term liability metrics.

"The city's long-term liability burden is expected to improve with no additional debt being planned for the upcoming years," Fitch said.

The AA rating with a stable outlook incorporates the city's very strong financial resilience assessment, given its long-time maintenance of healthy reserve levels, the agency said. The rating also reflects the city's strong legal capacity to raise revenues and control expenditures, given the absence of collective bargaining agreements, according to Fitch.

Fitch expects the city to maintain reserve balances of at least 7.5% of spending.

Fitch said the city's shrinking population was a credit negative. Its 10-year annual median change in population was negative 0.3%.

The city's unemployment rate, educational attainment and median household income are also weak compared to other cities in the AA category, Fitch said.

However, Birmingham's credit benefits from substantial population size and diverse economy.

The city's long-term liability metrics are moderately weak although improving. The city had $474 million in non-current bonds outstanding and $1.6 billion in total liabilities as of June 30, 2024, according to its annual comprehensive financial report.

Birmingham's GO bonds are rated Aa3 by Moody's Ratings, AA by S&P Global Ratings, with stable outlooks. The city appears to be rated AA by KBRA, but that couldn't be verified by press time.

Birmingham officials didn't immediately respond to a request for comment.