Moody's Investors Service downgraded Baltimore City's credit rating to A2 from A1, citing sustained population decline that weakens the city's tax base and long-term financial stability.
Baltimore's population has fallen for eight consecutive years, according to U.S. Census Bureau estimates. The city lost over 20,000 residents between 2020 and 2023, reaching its lowest count since the 1930s. This exodus directly erodes property tax revenues, income tax collections, and local consumer spending.
The downgrade creates material headwinds for Exelon (EXC). Through subsidiary Baltimore Gas and Electric, the company provides electricity and natural gas to the city and surrounding counties. A shrinking customer base pressures BGE's revenue growth and may force management to revisit capital expenditure plans. Watch EXC's Q3 earnings call for commentary on regional demand trends and any regulatory responses to the deteriorating municipal finances.
Moody's also flagged Baltimore's elevated fixed costs—debt service and pension obligations—which become more burdensome as the revenue base contracts. The A2 rating implies higher borrowing costs on future municipal bond issuances and limits the city's capacity for infrastructure investment, further hindering economic revitalization and business attraction.
