The recently elected mayor of Providence, Rhode Island hailed the city's second rating upgrade in recent months.
Moody's Investors Service on March 13
"Today's bond rating upgrade is another sign that we are on the right path," Mayor Brett Smiley said in a
Smiley took office in January, succeeding Jorge Elorza, who couldn't run again because of term limits.
Moody's also upgraded lease revenue bonds issued by the Rhode Island Health and Educational Building Corporation, Providence Public Building Authority, and Providence Redevelopment Agency to Baa1 from Baa2.
The city has approximately $749.9 million in debt outstanding, to which Moody's assigns a stable outlook.
"The upgrade of the issuer rating to A3 reflects a stable but still limited financial position with modestly improved reserves, a diverse economy anchored by education and health services and government employment as well as below-average resident income and wealth," Moody's said.
In November Fitch Ratings upgraded the city's GO bond rating to A from A-minus, and its issuer default rating to BBB-plus from BBB, citing "the city's general credit quality."
Moody's cited Providence's responsible management of its pension fund in the decision; the city met its annual actuarial determined contribution for 11 years straight and remained committed"to addressing its unfunded long-term pension liability."
Providence has $1.2 billion of pension liabilities for a 24% funding level as well as $1.1 billion in OPEB liabilities,which according to Moody's present a risk for the city's long-term fiscal health.
Smiley said his administration would continue to make "steady contributions to our pension fund while strategically investing in our city's infrastructure that can improve the quality of life of our residents."
The GO unlimited tax bonds are backed by the city's unlimited property tax pledge and benefit from state law prioritizing GO debt in the case of bankruptcy, Moody's said.
S&P Global Ratings assigns its BBB-plus rating and stable outlook to Providence GO bonds.
