San Antonio is the only U.S. city among the top 10 largest to obtain the highest grades possible from all three credit rating companies — the much coveted triple-A.

It’s a rare accomplishment and kind of a big deal. Even the federal government doesn’t have a triple-A rating from all three major bond raters: Fitch Ratings, Moody’s Investor Service and S&P Global Ratings.

Those three letters, AAA, are worth a lot of money. They helped save San Antonio $26.4 million in August.

Only two U.S. corporations, Microsoft and Johnson & Johnson, are triple-A rated.

“San Antonio’s rating is reflective of its vibrant economy, one that is stable,” said Suzanne Finnegan, chief credit officer for Build America Mutual, a municipal bond insurance company based in New York City.

In Texas, the downturn in oil has weakened the finances of many municipalities, but San Antonio has been virtually untouched. The Alamo City’s economy is diverse and has been resilient, bolstered by other sectors, such as health care and service industries, that have remained strong despite low oil prices. That has boosted tax revenue and allowed city managers to invest in infrastructure projects that encourage growth, like the recent extensions of the River Walk north and south of downtown, Finnegan said.

“In short, cities need to spend more (on infrastructure) but don’t have the resources to do that,” Finnegan said, adding that San Antonio “has good management.”

“It is proactive and looks into the future to see where the city is headed,” she said.

San Antonio also has “pretty modest” levels of debt, Finnegan said, about $2.8 billion in total outstanding debt. Roughly $1.6 billion of that is in the form of so-called general obligation bonds, which are supported by property taxes. Those are the ones that are triple-A rated, indicating the overall financial health of the city.

A strong bond rating “may cover the economic strength of the community, the flexibility of the entity’s budget, the overall budgetary performance, the strength of predictability of the entity’s cash levels and how well managed is the entity’s financial policies and practices,” said Cliff Blackwell, director of administrative services for the city of Bedford and president of the Government Finance Officers Association of Texas. “San Antonio must be fairly strong in those areas to achieve a triple-A rating.”

The three credit rating companies reaffirmed their top ratings for San Antonio’s Aug. 2 sale of $331.3 million in bonds. S&P, Moody’s and Fitch all commended the city for its diverse, stable economy, and its mix of property and sales taxes, along with revenue from CPS Energy, the strength of the city’s financial team, and its budgeting flexibility and financial reserves.

“We consider San Antonio’s economy strong,” S&P wrote in a July 27 report.

Fitch said the city’s AAA rating reflected its “strong revenue flexibility and growth prospects, minimal revenue volatility and superior financial resilience.”

“Steady population growth is fueled by affordable housing prices and ample developable land,” Fitch said in a July 29 report. Fitch is majority owned by the Hearst Corp., the parent company of the San Antonio Express-News.

Moody’s cited San Antonio’s “large and robust economy,” calling the city — the seventh largest in the U.S. with an estimated 1.5 million residents — a “regionally important economic center with defense, finance and tourism supporting professional and technical jobs.”

On Wall Street, San Antonio and its bonds are considered “prime,” the highest among investment grade debt issuers.

Other cities with populations topping 1 million are not so fortunate. Chicago’s bonds were cut to junk status in recent years. Philadelphia, which has 1.6 million residents, is considered “medium” investment grade. Dallas, with 1.3 million residents, is rated as “high grade” but not prime. Even New York and Los Angeles, the two largest U.S. cities, are high- or upper-medium grade investments.

That high of a rating from all three companies is comparable to having perfect credit. Investors will lend you money at the lowest rates available.

The top rating, which San Antonio has held for the past seven years, saves taxpayers tens of millions of dollars annually that can be allocated for other projects, such as streets and sidewalks.

The better the credit rating, the lower the interest expenses. It would cost taxpayers $1.2 million more in interest payments for every $100 million in bonds if the city’s credit rating dropped two notches to double-A, and an extra $2.9 million if the city was rated single-A.

“The AAA bond rating means millions in savings to our taxpayers and the ability to continue addressing the tremendous infrastructure needs across our city,” Mayor Ivy Taylor said in a statement. “This is a reflection of the excellent financial management of our city by our city manager and her financial team.”

Other cities struggle to raise their municipal bond credit ratings.

“Except for Chicago, which is rated Ba1, the other cities with population over 1 million are all rated in the Aa range, which are high-quality bonds that are subject to very low credit risk,” David Jacobson, Moody’s public finance group communications strategist vice president, said in an email. “That said, we have downgraded some of these cities over the past few years because of a growing unfunded pension liability. These include Chicago, Dallas and Houston.”

San Antonio’s credit rating, combined with historically low interest rates, allowed the city in August to refinance about $167.4 million in bonds originally issued in 2006 and 2008 at a significant discount. The bonds were issued before the city achieved its triple-A rating and when interest rates were higher. San Antonio — which was paying investors yields of 4.25 percent to 4.97 percent on that debt — was able to pay that off with new bonds that cost between 0.77 percent and 2.49 percent, saving an estimated $26.4 million.

S&P first upgraded San Antonio to triple-A in October 2008, followed by Moody’s and Fitch in June 2010.

“While not everyone understands bond ratings and the financial markets, I know that everyone understands $26 million in savings. It directly benefits the community,” San Antonio City Manager Sheryl Sculley told the City Council at a meeting Aug. 4. “We’ve worked hard to achieve back in 2008 the first AAA bond rating for the city of San Antonio and to maintain the bond rating over the years.”

City Council members applauded when Sculley announced to them Aug. 4 that the city had obtained its seventh straight year of triple-A ratings.

“That continues to be one of our strengths, and certainly it is your leadership and dedication,” Councilman Cris Medina said to Sculley at the meeting.

The city has completed five similar bond refundings since 2012, taking advantage of the city’s good credit and low interest rates. It has saved taxpayers a total of roughly $57.1 million, including the refunding in August.

Bond ratings are determined every time the city issues debt, San Antonio Chief Financial Officer Ben Gorzell said in an interview. San Antonio has at least one main bond issuance a year so it can refinance older bonds at cheaper rates, he said.

The city’s financial team, led by Sculley, sometimes meets with the credit rating companies at their Dallas or Austin offices. Their analysts also come to San Antonio to check out public projects, such as they did July 12 for two hours of back-to-back meetings at the newly expanded Convention Center, Gorzell said.

“We had it there so they could see what (the Convention Center) looks like completed. We like for them to come to San Antonio so they can see all the change in the city that is happening with our bond projects,” Gorzell said. “We cover a lot of ground” during the meetings. Each agency has its own criteria, and they usually have follow-up questions.”

The city is preparing for its biggest bond program yet, an $850 million financing package that will go to voters in May.

Moody’s and S&P said the biggest threats to San Antonio’s credit rating are budgetary pressures from pension programs and the possibility of reduced property values.

“Some things are under our control. Some are not,” Gorzell said. “A lot depends on having the ability to manage costs going forward. We’re trying to meet demands for services in a way that is affordable for taxpayers.”

dhendricks@express-news.net