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S&P adds negative outlook to St. Louis' bond rating

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St. Louis City Hall

The Tucker Boulevard entrance to St. Louis City Hall.

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S&P Global Ratings affirmed St. Louis' bond rating Monday but changed its outlook on the city's finances to negative.

S&P analyst John Kenward said in a statement that the coronavirus pandemic "will materially limit the city's ability to maintain structural balance within the current and following fiscal years."

S&P has had an A-plus rating on St. Louis' bonds for several years. On its rating scale, scores in the "A" range indicate a "strong capacity to meet financial commitments."

The negative outlook indicates a one-in-three chance that the rating might be lowered. S&P said that would happen "if the COVID-19 pandemic and the ongoing recession lead to continued declines in convention- and tourism-related revenues, and in earnings and payroll taxes, resulting in a significant reduction to available reserves."

On the other hand, S&P said the outlook could return to "stable" if St. Louis officials make "necessary adjustments to maintain balanced operations and at least strong reserve levels."

Comptroller Darlene Green said in a statement that the affirmation of the A-plus rating is "a strong vote of confidence in the city of St. Louis."

Green added that the city "is positioned to weather the financial challenges that lie ahead."

In April, S&P had adopted a negative outlook for the local government sector as a whole, saying that many governments will face fiscal stress because of the pandemic.

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