NEW YORK - Standard & Poor's Ratings Services said it has raised its underlying rating on Waterbury, Conn.'s general obligation debt to A from A-minus based on the city's consistent financial operations in recent years, which have led to an improved financial position, coupled with the city's strong financial management policies. The outlook is stable.
At the same time, Standard & Poor's assigned its A long-term rating to the city's $21.5 million series 2012A GO bonds and $20.5 million 2012B taxable GO refunding bonds. The outlook is stable.
The A ratings reflect Standard & Poor's view of strength in the city's: very stable tax base, with strong per capita market valuation and adequate income levels; good general fund reserve position; and strong financial management policies and practices.
However, the ratings are somewhat constrained, in Standard & Poor's opinion, by the city's: high unemployment rate; moderate to moderately high debt burden that may rise in the near to intermediate term, as officials continue to implement its substantial capital financing plan; and elevated fixed costs associated with debt service on new and existing debt (including pension obligation bonds) and unfunded pension and other postemployment benefit liability requirements.
"We do not expect to change the rating on the city's GO debt within the two-year outlook period, as we expect that the city will continue to produce stable, balanced financial results despite the elevated fixed costs associated with debt service on new and existing debt (including POBs) and unfunded pension and OPEB liability requirements," said Standard & Poor's credit analyst Matthew Stephan. "We also expect that city officials will continue to adhere to the city's established financial policies and practices," he added.
The city's full faith and credit pledge secures the GO bonds. Officials will use series 2012A bond proceeds to finance various road, school facilities, and municipal improvements. Officials will use series 2012B bond proceeds, along with $6.5 million of restricted special capital reserves that will be released concurrent with the bond issue, to refund and defease the city's outstanding series 2004B general obligation tax revenue intercept refunding bonds (special capital reserve fund bonds) for net present value savings equal to about 1.5% of the refunded principal.
Waterbury, with a population estimated at 109,273, is located in west-central Connecticut, about 21 miles north of New Haven (A-minus/stable) and 29 miles southwest of Hartford (A/stable).