Fitch U.S. Muni Surveillance: Fitch Upgrades Pittsburgh, PA GOs to 'BBB+'

NEW YORK--(Business Wire)--
In the course of routine surveillance, Fitch Ratings has upgraded approximately
$725 million in outstanding general obligation (GO) bonds issued by the city of
Pittsburgh, PA (the city) to 'BBB+' from 'BBB'. The Rating Outlook is Stable.

The upgrade reflects Pittsburgh's stabilized financial position, the revision to
the city's tax structure providing a broadened tax base, and ongoing oversight
from two commonwealth entities. Adding to the credit strength are the city's
continued efforts to fund its manageable capital needs on a pay-as-you-go basis
in order to reduce its high debt burden and the new revenues generated from
gaming operations expected on come on line in May of 2009. Fitch recognizes the
benefits to the city's economy of the presence of a number of large stable
healthcare providers, higher education, and financial services institutions.
Also considered in the rating are the city's high debt load and poorly funded
pension plans.

Like many older urban areas, Pittsburgh's economy has been challenged for
decades by declining population. The decline appears to be abating; the 2007
estimated population was 7% below the 2000 census figure, after declining 9.5%
during the 1990s. The unemployment rate remains low at 5.3% in September 2008
close to state and national levels. Education and health services represent a
high 20% of MSA jobs providing some long-term economic stability. City per
capita and median household income level indicators in 2006 were strong, at or
above state and national averages.

The city's high debt and long-term liability profile remain the key credit
concern. Including $261.5 million in pension obligation bonds (POBs), overall
debt is $4,505 per capita or 10.5% of market value. The high debt to market
value ratio is compounded by a problematic property assessment process which is
under litigation. Rather than conducting a reassessment as scheduled in 2006,
assessed values have been rolled back to 2002 levels. Despite the sizable POB
issuance in 1996 and 1998, the city's combined pension funded ratio was only
35.9% as of September 2008, which does not incorporate a reduction in the
assumed rate of return on investments to 8% from 8.75%. While the city funds its
annually required contributions, actual investment returns have declined
significantly and it is not expected that funding ratios will reach satisfactory
levels for some time.

Fitch issued an exposure draft on July 31, 2008 proposing a recalibration of
tax-supported and water/sewer revenue bond ratings which, if adopted, may result
in an upward revision of this rating (see Fitch research 'Exposure Draft:
Reassessment of the Municipal Ratings Framework'.) At this time, Fitch is
deferring its final determination on municipal recalibration. Fitch will
continue to monitor market and credit conditions, and plans to revisit the
recalibration in the first quarter of 2009.

Fitch's rating definitions and the terms of use of such ratings are available on
the agency's public site, www.fitchratings.com. Published ratings, criteria and
methodologies are available from this site, at all times. Fitch's code of
conduct, confidentiality, conflicts of interest, affiliate firewall, compliance
and other relevant policies and procedures are also available from the 'Code of
Conduct' section of this site.

Fitch Ratings, New York
Ann G. Flynn, +1-212-908-9152
Amy R. Laskey, +1-212-908-0568
Media Relations:
Cindy Stoller, +1-212-908-0526
cindy.stoller@fitchratings.com

Copyright Business Wire 2009