TAMPA — As the U.S. government goes, so goes Hillsborough County — at least when it comes to credit ratings.
As expected, Moody's Investors Service on Thursday placed a negative outlook on the Aaa credit rating of Hillsborough County and more than 300 other public finance issuers that are heavily dependant on the national government.
The development follows last week's announcement that Hillsborough was among the entities the credit rating agency put on a watch list as the U.S. government grappled with raising its debt limit.
An agreement Tuesday to raise the debt limit removed the risk of a U.S. default, Moody's said, but the federal government still faces other economic headwinds and political uncertainty that merit a negative outlook.
Moody's tagged the negative outlook on the ratings of five states, along with 303 local governments, special districts and nonprofits that depend the most on the federal government for revenue and employment.
"In order to have a stable outlook, an issuer will need to have credit quality that could be expected to remain higher than that of the U.S. government in the event that the sovereign were downgraded," Moody's said in a statement.
A bond issuer like a local a government could face higher borrowing costs if it's viewed as a higher credit risk.
Hillsborough County Administrator Mike Merrill said he wasn't concerned it will reach that point. For one, he said, investors realize that the action was connected to the U.S. government's debt outlook rather than the county's financial stability.
Moreover, Merrill said, Moody's notified the county that its rating, along with others with a negative outlook, will be reviewed individually over the next few weeks.
"At that point I expect our negative outlook will be lifted," he said. "Obviously, that's up to them, but my sense is we have very strong credit and strong reserves. I'm looking forward to (the review) happening."