Standard & Poor's upgraded New Britain, Conn.'s general obligation pension funding bonds three notches to A from BBB.
New Britain, the 73,000-population home to Stanley Black & Decker Inc. - formerly Stanley Works - and nicknamed the Hardware City, has scheduled a $56 million negotiated sale. A date has yet to be set.
S&P credit analyst Ruth Ducret cited New Britain's return to structural balance without one-time revenues or draw-downs from reserves, and steps to remove contingent liabilities. S&P assigned a stable outlook.
"A three-notch upgrade is very rare, especially coming on the heels of a downgrade last year," said Richard Thivierge of William Blair & Co., the city's underwriter.
Moody's Investors Service in September downgraded New Britain to Baa1 from A2. Moody's this week affirmed the rating. According to Moody's, New Britain has $218 million of debt outstanding.
Proceeds of the taxable Series 2015A bonds will fully refund the Series 2008C variable-rate pension bonds and pay for termination costs of outstanding related swaps.
Mayor Erin Stewart's 2015 budget reflected more than $16 million in spending cuts from the previous year, eliminated more than 30 full-time equivalent positions and called for union concessions. It also included an 11% increase in taxes. Last June, it received the support of a supermajority of the 15-member Common Council.
"This is phenomenal news and is a strong validation of the difficult financial decisions we have made over the past 14 months," said Stewart, 26, elected in November 2013. "A year ago, we were staring a $30 million-dollar deficit in the face and were being downgraded by the rating agencies."
