Moody's Investors Service upgraded Central Falls, R.I., by one notch to Ba3 from B1, affecting $8.7 million in general obligation debt for a city that emerged from a 13-month stay in bankruptcy court in September 2012.
The city's GO rating is still junk level.
Moody's has also affirmed the Ba1 underlying rating with a stable outlook on the Rhode Island Health and Educational Building Corporation's Series 2007B bonds, affecting $4.9 million in rated RIHEBC pooled debt.
"The upgrade to Ba3 reflects the city's recent trend of favorable operating results," Moody's said in a June 23 statement that cited Rhode island's transition to local control in April 2013.
While under federal Chapter 9 protection, Central Falls adopted a six-year financial plan that a federal court approved. The 18,000-population city filed for bankruptcy on Aug. 1, 2011, listing an $80 million unfunded pension liability. It cut retiree benefits by up to 55% during the plan.
"It's nice to know that the people in New York are confident that we're doing better," Mayor James Diossa said in a recent interview.
Moody's said that the city still faces significant challenges stemming from high fixed costs and years of deferred capital expenditures and projected weakness in revenue growth, including the loss of an annual Impact Fee payment and back taxes owed from the Wyatt Detention Center. The privately operated prison is under receivership.
