Standard & Poor's raised its rating on Central Falls, R.I.'s general obligation debt to BB from C. The outlook is stable.
Central Falls exited bankruptcy protection in September, after a 13-month stay in Chapter 9. Credit analysts said a 2011 state law giving bondholders priority in bankruptcy filing enabled the city to remain current on its bond payments.
"The upgrade reflects active state oversight of the city's financial operations, and an approved six-year operating plan that maintains structural balance," said credit analyst Victor Medeiros in a report released late Thursday.
While Rhode Island recently began the transition to local control in 19,000-population Central Falls, fiscal oversight will remain for five years.
