Fitch Ratings said it has upgraded to BBB-plus from BBB-minus the ratings on Pawtucket, R.I.'s outstanding general obligation bonds: $3.98 million series 2001 and $8.82 million series 2005.
The rating outlook is revised to stable from positive.
The bonds are an unlimited tax general obligation of the city backed by its full faith and credit.
The two notch upgrade reflects the city's and school fund's significant improvement in operations and rebuilding of reserve levels to solid levels. Fitch views management's projections for additional improvement in reserves for fiscal 2014 as reasonable.
The school department has successfully eliminated its cumulative deficit two years earlier than planned due to a combination of additional city support and positive operating results reported in fiscal 2013 and projected for fiscal 2014.
The city's unfunded pension and other post-employment benefit (OPEB) liabilities are very high and costs are growing. The city has been making its full pension annual required contributions (ARC) after a period of underfunding. Recently approved pension reforms have helped control growth in the ARC.
The city's debt levels are expected to remain low even with future planned debt issuances.
levels are relatively low and the city's unemployment rate exceeds state and national averages.
