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Birmingham loses coveted AAA credit rating

Birmingham loses coveted AAA credit rating

🕔26.Feb 2013

brumBirmingham City Council has lost its coveted AAA rating of credit worthiness.

Financial analysts Moody’s decided to downgrade the local authority in line with its latest ranking for the United Kingdom government, which has also been deprived of its triple-A status.

The move down a notch to Aa1 could make the future cost of borrowing higher for the council, although the new rating remains the second highest rating it is possible to achieve.

Moody’s continue to judge the council’s financial outlook as ‘stable’ alongside four other UK local authorities and Transport for London who have also lost their AAA rankings.

The decision to downgrade came just 16 months after Birmingham was awarded triple-A status, generally regarded as the ‘gold standard’ of credit worthiness.

It also indicates a sudden change of mind by Moody’s, which only last month reaffirmed Birmingham as an AAA rating, although with a negative outlook for the future.

The downgrade reflects growing concern about UK sovereign debt and the impact of the financial crisis on local councils who are largely dependent on government funding.

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