Agency Affirms Baa1 General Obligation & Baa2 Lease Ratings
June 19, 2018
PROVIDENCE, RI – Mayor Jorge Elorza today announced that Moody’s Investors Service has upgraded the City of Providence’s outlook to stable from negative. Moody’s also affirmed the City’s Baa1 general obligation rating and Baa2 lease ratings. According to the agency, the upgrade reflects Providence’s improved financial position, manageable fixed costs and growing economy.
“Moody’s upgrade recognizes the progress we’ve made through our commitment to long-term planning and fiscal responsibility,” said Mayor Jorge O. Elorza. “We’re a city on the rise and while this is big news, we must continue to keep a close eye on our finances to keep Providence going strong.”
In its report, Moody’s noted that Providence serves as a regional economic center and pointed to improved budgeting practices and a stabilizing financial position due to multiple years of positive operating performance. The City realized a $5.4 million operating surplus in fiscal year 2017, bringing its Operating Fund balance to $2.3 million. The analysis underscored the elimination of the City’s cumulative deficit three years ahead of its Combined Deficit Reduction Payment Plan schedule. A $3.5 million surplus is expected for fiscal year 2018 for additional growth to reserves.
Other factors considered included pension savings achieved through multiple years of early payments of the city’s ARC; improvement in funding for long-term liabilities; a growing tax base with growing economic development; and decline in unemployment.
In 2016, Fitch Ratings upgraded the City’s outstanding General Obligation (GO) Bonds to ‘A-‘ and assigned a ‘stable’ outlook. Fitch also upgraded Providence’s Issuer Default Rating (IDR) to ‘BBB’ from ‘BBB-‘.