Summary
The rating reflects the stability of pledged revenues, which are derived from a 1.5% wage tax levied on Philadelphia residents and segregated from city finances. Debt service coverage has steadily improved due to revenue growth and the prohibition of new debt issuance beyond refunding. The strong oversight function of PICA, which ensures financial discipline in Philadelphia, was a contributing factor to the high rating. S&P also noted the city’s moderate economic expansion and improving employment trends as positive indicators for revenue growth. Given the legal structure and continued economic strength, coverage is expected to remain robust through bond maturity in 2023.