Moody’s upgrades Cranston’s bonds to A1 rating

CRANSTON MAYOR Allan Fung said he anticipates “substantial savings,” from the refunding of the existing bonds and predicts savings could increase even further with Moody’s upgrade.  / PBN FILE PHOTO/MICHAEL SALERNO
CRANSTON MAYOR Allan Fung said he anticipates “substantial savings,” from the refunding of the existing bonds and predicts savings could increase even further with Moody’s upgrade. / PBN FILE PHOTO/MICHAEL SALERNO

CRANSTON – Moody’s Investors Service Inc. has upgraded Cranston’s general obligation bonds to an A1 rating, as the city readies to refinance $8.1 million.
The new rating replaces the city’s previous A2 rating, which it received in 2012. The A1 rating is assigned on the city’s $70.8 million of outstanding general obligation debt and Cranston’s $8.1 million general obligation refunding bonds, expected to be sold on June 1.
“The A1 rating reflects the sizable and diverse tax base with above average demographics, improved financial position with adequate reserves, manageable debt burden and large unfunded pension liability,” according to Moody’s.
Mayor Allen W. Fung, whose administration requested the rating review, anticipates “substantial savings,” from the refunding of the existing bonds and predicts savings could increase even further with Moody’s upgrade.
“This upgrade is fantastic news,” he said in a statement. “We’ve come a long way and restoring fiscal accountability to the city of Cranston has been a priority of my administration. When we first took office, we inherited deficits in the city and school budgets and our rainy day fund was headed in the wrong direction. Under my administration, our entire community, including municipal employees and residents, has worked together to restore our fiscal health. We made cuts to our budget, reformed our local pension plan, reduced debt to manageable levels and built up a health rainy day fund.”
The rating agency said the city’s rating could increase again should it maintain a trend of budget surpluses, expand its tax base and demographic profile and make a material decline to its pension liability. But it warned that budgetary deficits to the general or school funds, an underfunding of the city’s annual required contribution to its local pension system and any significant growth to its debt, pension and or other post-employment benefit liabilities, could lead to a downgrade.
Moody’s did not assign an outlook, which is typical for local governments with this amount of debt outstanding.
“This rating increase proves the success of our efforts,” Fung continued. “It will allow us to achieve significant savings immediately as we refinance our existing debt and also in the future when we borrow for road and infrastructure projects that will be undertaken in later years.”
Moody’s also affirmed the Aa3 general obligation pooled rating for the R.I. Health and Education Building Corp. Series 2011A bonds and affirmed the A1 general obligation pooled rating on RIHEBC’s series 2008B bonds.

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