Reeling Providence received another rating downgrade late Monday when Moody’s Investors Service lowered the Rhode Island capital’s general obligation bond rating one level to Baa1 from A3, affecting $55.6 million of outstanding debt.
The downgrade “reflects the city’s strained financial position with diminishing liquidity and a sizeable budget gap in the current fiscal year,” Moody’s said.
Providence, despite raising some additional revenue and reducing expenditures, faces a $20 million deficit in fiscal 2012, which ends on June 30.
Moody’s also lowered the underlying rating assigned to $247 million of debt issued for school projects by Providence through the Rhode Island Health and Education Building Corp. It also downgraded the ratings assigned to the city’s Providence Public Buildings Authority and Providence Redevelopment Authority lease revenue bonds to Baa2 from Baa1, affecting $258.3 million of debt.
Fitch Ratings on March 14 dropped the city’s GO rating three notches to BBB from A with a negative outlook.