Moody’s downgrades Providence to ‘Baa1’

PROVIDENCE'S general obligation rating was downgraded from ‘A3’ to ‘Baa1’ by Moody’s Investors Service – a globally recognized rating company.
Posted 3/27/12

NEW YORK - The city of Providence’s general obligation rating was downgraded from ‘A3’ to ‘Baa1’ by Moody’s Investors Service – a globally recognized rating company. The announcement was made on Monday, March 26.

The ranking affects $55.6 million in outstanding debt, as well as the underlying rating assigned to $247 million in debt issued for school projects by Providence through the R.I. Health and Education Building Corp.

The city’s outlook remains “negative”, according to the firm.

In addition, Moody’s downgraded the ratings assigned to the Providence Public Buildings Authority and Providence Redevelopment Authority lease revenue bonds from ‘Baa1’ to ‘Baa2’, affecting $258.3 million of outstanding debt. The new ranking is two steps above junk bond status.

The downgrade to ‘Baa1’ “reflects the city's strained financial position with diminishing liquidity and a sizeable budget gap in the current fiscal year. Despite some success in raising additional revenue and reducing expenditures, the city faces a $20 million deficit in fiscal 2012, which ends on June 30,

“Although it is possible that additional revenue from newly negotiated payments in lieu of taxes will be secured prior to year-end, the primary strategy for closing the gap is the elimination of cost of living adjustments for retirees, which reduces the city's appropriation to the locally-funded pension system by $16 million but is likely to be challenged in court.

“The city's cash position is projected to decline to by year-end, and cash flow borrowing is likely to be necessary to finance operations early in fiscal 2013,” said the report.

The rating and negative outlook reflect the city's deteriorated financial position – a $30 million projected budget gap for fiscal 2013 – the uncertain outcome of litigation challenging its ability to transfer eligible retirees to Medicare and low funding of its local pension plan.

On March 14, Fitch Ratings downgraded Providence’s bond rating from A to BBB and characterized its outlook as “negative.”

PBN Hosted

Join PBN for the best networking event and party of the winter - January 15, 2015 - the Book of Lists Party at the Providence Public Library. Reserve your spot by December 31st and get a holiday gift from PBN!
  • Best Places to Work
    Enrollment is now open for the 7th annual Best Places to Work program. Winners w ...
  • Manufacturing Awards
    Applications are now being accepted for the 2nd Annual Manufacturing Awards. Dea ...
Purchase Data
Book of Lists
Book of Lists cover
PBN's annual Book of Lists has been an essential resource for the local business community for almost 30 years. The Book of Lists features a wealth of company rankings from a variety of fields and industries, including banking, health care, real estate, law, hospitality, education, not-for-profits, technology and many more.
Data icons
Data can be purchased as single lists, in either Excel or PDF format; the entire database of the published book, in Excel format; or a printed copy of the Book of Lists.
  • Purchase an e-File of a single list
  • Purchase an e-File of the entire Book of Lists database
  • Purchase a printed copy of the Book of Lists
    Latest News