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City of Oakland
General Obligation (GO) Credit Ratings
PFM Financial Advisors LLC 100 Montgomery Street
Suite 2150
San Francisco, CA 94104
pfm.com
Jaime Trejo
Presented By: PFM Financial Advisors, LLC
January 27, 2026
ATTACHMENT A
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What is a Credit Rating?
What Is a Credit Rating: An alphabetic and/or numeric symbol that indicates an issuer’s credit quality and measures the risk of default and an issuer’s ability to repay principal and interest Who Determines the Credit Rating: Independent, private rating agencies use market-accepted, objective assessments based upon published criteria
• Agencies: Moody’s, S&P Global Ratings, Fitch Ratings
Who Uses the Credit Rating:
• Institutional and Retail Investors (buyers of a municipality’s bonds)
• Commercial lenders (for lines of credit, bank loans, etc.) Why are Credit Ratings Important:
• Higher ratings = broader investor base & lower interest costs • Market access: Issuers with non-investment grade ratings (“BBB-”) have trouble accessing the capital markets
INVESTMENT GRADE RATINGS
MOODY’S S&P FITCH
Aaa AAA AAA
Aa1 AA+ AA+
Aa2 AA AA
Aa3 AA- AA-
A1 A+ A+
A2 A A
A3 A- A-
Baa1 BBB+ BBB+
Baa2 BBB BBB
Baa3 BBB- BBB-
*Highlighted ratings indicate the respective underlying general obligation ratings for the City of Oakland
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Factors That Determine a Credit Rating
Rating agencies use market-accepted criteria and published rating methodologies to provide a rating for a specific municipality and bond issuance. Their rating factors include:
• Economy: Income levels, economic output, volatility, growth prospects • Financial Performance: Operating results over time, structural balances • Reserves & Liquidity: Available reserves as % of revenue, liquidity • Management: Budgeting practices, long-term planning, policies, governance • Debt & Liabilities: Long-term liabilities ratio, fixed-costs ratio, debt service burden, net direct debt per capita, pension/OPEB liabilities
• Nothing Factors: Factors that consider things like local resources, limited scale in operations, population size, and governance issues that provide some discretion on rating outcome • Other Considerations: Strengths or weaknesses that are not fully reflected in the application of the criteria; peer rating analysis
Source:
Methodology For Rating U.S. Governments, spglobal.com/ratings ( September 9, 2024) Rating Methodology, US Cities and Counties, moodys.com (July 24, 2024) © PFM 4
Credit Rating Outlooks
A rating outlook is the forward-looking opinion of a credit rating agency about the potential direction of a credit rating over a defined period, typically 12–24 months Why do outlooks matter?
• Influences Borrowing Costs: A negative outlook can increase borrowing costs because it signals higher perceived risk to investors
Positive
Meaningful
chance of a
rating upgrade
Stable
Unlikely to
change
Negative
Meaningful
chance of a
rating
downgrade
Outlooks
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Oakland GO Credit Rating Movement
Current Ratings (as November 20, 2025)
• Moody’s Investors Service: Aa2 (Negative Outlook)
• S&P Global Ratings: AA- (Negative Outlook)
• Fitch Ratings: A (Negative Outlook)
- December 5, 2024, rating was lowered to “Aa2/Negative” from “Aa1/Stable” - October 9, 2025, rating and outlook were affirmed “Aa2/Negative” - November 20, 2024, rating placed on CreditWatch with negative implications - February 19, 2025, rating lowered to “AA-/Negative” from “AA+/Watch Neg” - October 6, 2025, rating and outlook were affirmed at “AA-/Negative” - November 27, 2024, rating was lowered to “A/Negative” from “AA-/Stable” - May 30, 2025, rating and outlook were affirmed at “A/Negative”
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Oakland’s Credit Rating Strengths*
• Central location in the San Francisco Bay Area, with strong property wealth and a diverse tax base
• Assessed value per capita is high, and the economy includes major sectors like logistics, tech, healthcare, and transportation
Large and Diverse Economic Base
• Strong local support for supplemental revenues
Voter Support for Revenue Measures
• Maintenance of high cash and investment levels
Liquidity
• Proactively identified and enacted balancing actions in 2025 to close fiscal gap Management Actions
*Based on most recent Moody’s and S&P credit rating reports © PFM 7
Oakland’s Credit Rating Challenges*
• Expenditure growth outpacing revenue growth, driven largely by public safety overspending
• Projected out year deficits
• Reliance on optimistic assumptions in budgets (Proposed 2026 revenue tax measure) Structural Budget Imbalance
• Reserves below policy targets in fiscal 2024; although improving, flexibility remains limited
Declining Financial Flexibility
• Elevated pension and OPEB liabilities (over $3 billion combined) and annual fixed costs
• Long-term liabilities ratio remains very high compared to national medians High Fixed Costs and Liabilities
*Based on most recent Moody’s and S&P credit rating reports © PFM 8
Upside and Downside Scenarios
Negative Outlook:
• Reflects near-term financial headwinds and anticipated structural deficits driven by expenditure growth (especially public safety costs) outpacing revenue growth
• Future budget reductions will be needed to restore long-term sustainability Moody’s Outlook:
• Upside: Rating could be upgraded if there is a meaningful increase in financial flexibility with general purpose reserves exceeding 30%; and significant decline in long-term liabilities ratio to below 200% • Downside: Rating could be downgraded if structural budget adjustments are not implemented and sustained decline in the available fund balance ratio to below 20% of operating revenues S&P Outlook:
• Upside: Outlook could return to stable if the City sustainably eliminates deficit spending, achieves positive operating performance, and maintains economic growth in line with national trends • Downside: Rating could be lowered if structural budget challenges persist, and reserves are a level below the rating level
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Moody’s – Macro Credit Factors US Cities
Positive Trends: Strong property values, revenue growth, and stable reserves support credit quality Risks: Slower economic growth and reliance on one-time federal aid may pressure future budgets Structural Improvement: Declining pension liabilities and manageable fixed costs enhance long-term sustainability
0%
5%
10%
15%
20%
25%
30%
Aaa Aa1 Aa2 Aa3 A1 A2 A3 Baa1 Baa2 Baa3 Ba and
Below
Moody's National Rating Distribution – Cities (April 2025) Oakland’s Credit
Rating
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S&P Macro Credit Factors – California Local Governments Economic & Revenue Environment
• Slower economic growth; property value growth moderating; sales tax collections slowing • Expiration of federal stimulus
Budgetary Pressures
• Many municipalities forecast general fund deficits
• Operating costs (labor, benefits, goods) rising faster than revenues 23%
21% 21%
19%
13%
4%
0%
5%
10%
15%
20%
25%
30%
AAA AA+ AA AA- A+ A
S&P CA Munipalities Rating Distribution (10.16.2025)
Oakland’s Credit
Rating
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City of Oakland – 2025 General Obligation Bond Sale Summary Successful Bond Sale – December 4, 2025
• Sold $334.3 million in General Obligation Bonds (negotiated sale) • Strong investor demand allowed the City to secure lower-than-estimated interest rates Strong Investor Interest
• $638 million in total investor orders for $334 million offered • 26 institutional investment firms participated
Effective Interest Rates
• Tax-Exempt Bonds: 3.99%
• Taxable Bonds: 5.55%
Taxpayer Savings
• $4.7 million in present-value savings from refunding bonds • Reduced long-term debt service obligations
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Thank You