Moody's Investors Service said it has upgraded the city of Woonsocket, R.I.'s general obligation bond underlying rating to B2 from B3, affecting $155.2 million of outstanding debt, including GO-secured debt issued through the Rhode Island Health and Education Building Corporation (RIHEBC).
Moody's has revised the outlook on all of the city's debt to positive.
The upgrade to B2 from B3 reflects the recent improvement in the city's financial position, a result of oversight through the state's Fiscal Stability Act.
Under the state-appointed budget commission, the city generated operating surpluses in fiscal 2013 and 2014, and currently projects an additional surplus in fiscal 2015. If projections are accurate, the city will eliminate the deficit in the school fund by the end of the fiscal year (June 30).
For the first time since fiscal 2012, the city also projects that it will not need state aid advances to make fiscal 2016 debt service payments. The liquidity position remains narrow, however, and the city will continue to borrow from an enterprise fund to cover a cash flow shortage in July.
The rating also takes into account the challenges the city faces from slow economic growth, weak income levels, a very high debt burden and substantial unfunded pension and OPEB liabilities.
