Capital Improvement Plan bond issue assigned ratings; City of Providence’s general obligation debt rating affirmed
March 2, 2020
PROVIDENCE, RI – Mayor Jorge O. Elorza announced that Moody’s Investors Service and S&P Global Ratings have assigned respective “Baa2” and “BBB” ratings to the upcoming Providence Public Buildings Authority (PPBA) $95 million bond issue. Both Moody’s and S&P also affirmed their “Baa1” and “BBB+” general obligation ratings of the City’s debt.
“The ratings assigned by Moody’s and S&P are strong indications that we are putting Providence on sound financial footing and we are on the right track,” said Providence Mayor Jorge O. Elorza. “By using our stable position to fund historic investments in our roads, facilities and other public infrastructure, we are addressing years of deferred maintenance while strengthening our City from the ground up.”
In their published report Moody’s wrote that the “rating favorably incorporates the city’s sizable, diverse and expanding tax base, regional importance, and strong leadership and management.” The “improved and growing general fund and cash balances and disciplined approach to management of [the] debt burden” were noted as credit strengths while “the City’s large and growing unfunded pension and OPEB liabilities, elevated debt burden and above average poverty levels” were cited as factors offsetting the positive trends in City finances.
S&P referenced their August 2019 upgrade in stating “we raised our GO, PPBA, and moral obligation rating one-notch. The upgrade reflected the progress the city had made to its financial profile, correcting structural imbalances in its budget, with a trend of multiple years of at least balanced operations and our continued expectation that these results will continue.” S&P also noted the City’s “long-term budgetary pressure from its retirement obligations” as challenges the City will continue to face over the coming years.
The Providence Public Building Authority bond issue will help fund a $222 million five-year plan of improvements to roads, sidewalks, parks, recreation centers and public facilities included in the comprehensive Capital Improvement Plan (CIP) signed in January 2020. The bond issue is timed to coincide with maturing bond issues from years past, as part of the City’s continuing debt management plan.