Cincinnati plans to sell $112 million of general-obligation bonds to fund road construction and other projects as Ohio’s third-largest city negotiates to stabilize a pension system that contributed to a credit-rating downgrade.
The home to Procter & Gamble Co. (PG:US) and Kroger Co. (KR:US) is issuing about $81 million of new debt on April 16 for uses including road paving, a streetcar system and park improvements, said Meg Olberding, a spokeswoman. The city is selling another $31 million of bonds to refund outstanding securities.
Moody’s Investors Service assigned the debt an Aa2 rating, its third-highest level of investment grade, while Standard & Poor’s ranked it one step lower at AA-. S&P downgraded the city’s debt two steps to AA- last month, citing a likely budget shortfall of at least $22 million this year and an unfunded liability of $862.1 million in the Cincinnati Retirement System.
The City Council voted unanimously on March 19 to back Mayor John Cranley’s plan to negotiate a pension fix with employees and retirees, spokesman Kevin Osborne said. The proposal includes changes in cost-of-living adjustments for retirees and taking as much as $100 million from the system’s health-care trust for the unfunded liability, he said.
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