New Orleans downgraded two notches to Baa2 by Moody's

New Orleans' issuer, general obligation unlimited tax and general obligation limited tax ratings were downgraded to Baa2 from Aa3 Tuesday by Moody's Ratings. The agency also revised the outlook to negative from rating under review.

Moody's cited the city's "very limited financial position, supplemented by cash flow borrowing, with additional declines in reserves expected in fiscal 2025."

"While the city continues to implement expenditure reductions and expects additional revenues in fiscal 2026, reserves will remain well below peers in the next two years," Moody's said.

"The city has adopted a balanced fiscal 2026 budget through significant expenditure cuts,cash flow borrowing, and various new and one-time revenues," Moody's said. "Additional cuts and/or sustainable revenue increases will be essential to prevent further erosion of the financial position."

The city's main operation fund is believed to have had $67 million in reserves at the end of 2025, compared with $139 million at the end of 2024.

The city's economic gains in recent years have not kept pace with national gross domestic product growth, Moody's said.

Helena Moreno became mayor in early January with a new management team.

Moreno's press office didn't immediately respond to a request for a comment.

The city had $932 million in outstanding debt as of the end of 2024.

The city's issuer rating is A-minus with a negative outlook from S&P Global Ratings and A-minus with a negative watch from Fitch Ratings.