The Fitch Rating Service has upgraded the City of Knoxville's credit rating to AAA, the highest rating possible from the agency.

The city's rating had previously been AA+ and the change came after a recent recalibration of Fitch's municipal ratings. It apparently marks the first time that the City of Knoxville has ever held the highest rating from one of the major bond rating agencies. 

"We're pleased with Fitch's decision and I think it's reflective of the city's strong financial performance during very challenging economic conditions," Mayor Bill Haslam said. "It's the result of a lot of hard work by the administration and City Council to carefully manage the city's resources." 

"It's always nice when an organization like Fitch recognizes that hard work and we'll continue to practice the disciplined budgeting that got us to this point," he added.

With the Fitch change all three of the major bonds rating agencies - which provide information to investors - have now upgraded Knoxville's credit rating within the past two years.

Last month Moody's Investors Services raised the city's rating from Aa2 to Aa1, its second highest rating, and in 2008 Standard & Poor's upgraded the city's credit rating to AA+, its second highest grade.

The improved bond ratings mean that the city should be able to borrow money at a lower interest rate and it should make the city's bonds more attractive to investors.

Knoxville has not, however, borrowed any new money in several years and does not anticipate issuing bonds in the near future.

The city has reported operating surpluses during each of the past six years and the city's fund balance - essentially its savings account - has grown from $18.5 million when Haslam took office in 2003 to the current $52.3 million. The city has also not had a property tax increase since 2004.