Standard & Poor's Ratings Services said it raised its rating on Worcester, Mass.' general obligation debt to A-plus from A-minus.
The outlook is stable.
At the same time, Standard & Poor's assigned its A-plus rating to the city's $72.1 million GO municipal purpose loans of 2012.
"The upgrade reflects recent strong financial performance underpinned by Worcester's improved financial management practices and ongoing cost-control and reform measures," said Standard & Poor's credit analyst Victor Medeiros. Of note is the city's commitment to improving operating flexibility and financial reserves. In addition, recent economic revitalization efforts are gaining momentum, and we believe they will help expand the tax base in the long term.
Other factors supporting the rating are: a more diverse economy, shifting from manufacturing to services and benefiting from 10 colleges and universities and a strong health care sector; below-average, yet adequate, household incomes; very strong per capita market value with increased assessed value in 2012); good financial management policies that have helped maintain financial stability through the past recession; financial flexibility because of stronger reserves and $10.4 million in unused levy capacity representing 2% of budgeted expenditures; and a moderate fixed debt burden.
Standard & Poor's believes the city's vulnerability to potential state aid decreases and other recessionary pressures, particularly given current financial reserves, are offsetting credit strengths. Furthermore, Worcester's total postretirement liabilities are a long-term credit constraint, but believe the city continues to actively manage them.
The city's full faith and credit pledge secures the bonds and notes. Management will use proceeds from this issue to finance several capital improvement projects.
Worcester, with an estimated population of 181,000, is the second-most populous city in New England. It is 40 miles west of Boston and serves as a commercial and industrial center in central Massachusetts.