Moody's Investors Service said on Thursday that it downgraded the city of Waterbury, Conn.’s outstanding general obligation debt to A2 from A1. The outlook remains stable.
Moody’s said the downgrade reflects the city's outsized leverage and fixed costs.
“The rating acknowledges the city's stable financial position, which will be pressured over the longer term due to a high debt burden and pension and OPEB liabilities. The city's financial position, though stable for many years, limits operating flexibility, especially in light of high dependence on state revenues,” Moody’s said. “The rating also incorporates the moderately sized tax base and weak demographic profile, including below average wealth and incomes and high unemployment.”
Moody’s said the stable outlook reflects its expectation that the city's financial position will remain adequate, given conservative budgeting practices and formalized fiscal policies. The outlook also incorporates the likelihood of tax base and economic expansion given recent development projects, Moody’s said.