Moody’s lifts Pawtucket’s credit outlook to ‘stable’

THE CITY OF PAWTUCKET received its second credit outlook upgrade in eight months, as Moody's Investors Service raised its outlook on the city's $34.9 million in general obligation bonds from negative to stable. / COURTESY CITY OF PAWTUCKET
THE CITY OF PAWTUCKET received its second credit outlook upgrade in eight months, as Moody's Investors Service raised its outlook on the city's $34.9 million in general obligation bonds from negative to stable. / COURTESY CITY OF PAWTUCKET

PAWTUCKET – Moody’s Investors Service has affirmed its “Baa2” rating of Pawtucket’s $34.9 million in long-term general obligation bonds and raised the city’s rating outlook from negative to stable.
According to Moody’s rating system, obligations rated “Baa” are medium investment-grade with moderate credit risk, while the “2” modifier designates debt obligations at a mid-range ranking.
The Moody’s outlook upgrade follows the affirmation of Pawtucket’s investment-grade rating last November, when Fitch Ratings lifted the city’s credit outlook from stable to positive.
“The Moody’s rating affirmation and outlook upgrade continue the trend of positive financial news for our residents and taxpayers and show that the city is on a fiscal path to progress,” said Mayor Donald R. Grebien in a release announcing the Moody’s rating. “We still have a long way to go but we’re steadily getting there.”
In raising Pawtucket’s credit rating, Moody’s cited the city’s moderately sized tax base, relatively low tax burden, and efforts to improve Pawtucket’s financial position, including a reduction in the school fund’s accumulated deficit and the 100 percent funding of the city’s annual required pension contributions.
“The stable outlook reflects our belief that the city will maintain improved operating position, elimination of cash flow borrowing and full funding of the locally administered pension ARC with a pending funding improvement plan to reduce its unfunded liability,” Moody’s stated.
While the report noted that low income indicators and large unfunded post-employment benefits remain among the challenges facing Pawtucket, continued movement toward strengthening the city’s operating reserves and reducing unfunded liabilities could result in a credit rating upgrade.

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