Moody’s upgrades R.I. debt

RHODE ISLAND had its credit outlook upgraded by Moody's Investor Service from negative to stable thanks to
RHODE ISLAND had its credit outlook upgraded by Moody's Investor Service from negative to stable thanks to "the state's success in shoring up its finances," said the debt rating firm. / COURTESY WIKIPEDIA/CHENSIYUAN

PROVIDENCE – Moody’s Investors Service upgraded Rhode Island’s credit outlook from negative to stable while maintaining an Aa2 bond rating, the agency announced Monday.
The upgrade reverses the negative outlook assigned in 2011 and “reflects the state’s success in shoring up its finances through the maintenance of adequate available reserves and improved liquidity,” according to summary from Moody’s lead analyst Marcia Van Wagner.

Topping the list of factors improving the state’s financial position were pension overhauls between 2009 and 2011, the report said, though it noted the court challenges of those pension cuts is a significant cause of fiscal uncertainty.
In addition to pension changes, the report cited an “abatement” of negative demographic trends and a “reduced uncertainty” of the potential negative impact of increased competition for gambling revenue from Massachusetts.
The rating covers $2.2 billion in net state-supported debt and includes not only general obligation bonds, but also certificates of participation, moral obligation bonds and R.I. Health and Educational Building Corporation intercept programs.
The upgrade comes despite continued legal challenges to the pension overhaul and political pushes to default on remaining debt from 38 Studios bonds.
Just this spring, a consultant hired by the state to examine a possible 38 Studios default said it would likely lead the ratings agencies to downgrade the state’s credit to “junk” status.
Moody’s praised the state’s financial management, calling current practices “strong,” with “multi-year financial planning, consensus revenue forecasting and consistent maintenance of reserves.”
Threats to the state’s outlook include long-term economic underperformance, below-average employment, overdependence on gaming and “recent legislative controversy regarding the state’s moral obligation to appropriate debt service payments for 38 Studios economic development bonds.”

No posts to display