CRANSTON – Fitch Ratings Inc. has given high investment grade bond ratings to Cranston, saying it reflects the city’s solid financial condition and tax base, as well as state legislation that gives municipal bondholders lien priority if an issuing municipality goes into bankruptcy.
High ratings can make a municipality’s bonds more appealing to investors, impacting a municipality’s ability to raise money through bond sales for any number of government purposes, including maintenance and construction projects. Cranston is Rhode Island’s second-largest city with a population of about 81,000.
Fitch recently assigned an “AA+” rating to $17.6 million in Cranston general obligation bonds, series 2018A. The bonds were scheduled to price on July 24 via negotiated sale, with proceeds to be used to refinance outstanding bond anticipation notes and to fund capital projects.
Fitch also set Cranston’s issuer default rating at “AA-,” and gave an “AA+” rating to Cranston’s outstanding series 2010A, 2012A, 2013A and 2015A general obligation bonds and series 2012B, 2015B and 2016A general obligation refunding bonds.
Fitch said Cranston’s AA+ rating was largely based on action by the R.I. General Assembly to provide general obligation bondholders with a statutory lien on ad valorem taxes and general fund revenues of cities and towns with priority over creditors in the event of a bankruptcy by the issuer.
Fitch said Cranston’s AA- issuer default rating reflects the city’s “high revenue-raising ability, adequate expenditure flexibility, solid reserve levels and moderate long-term liability burden.”
In addition, Fitch said Cranston’s economy benefits from its location near Providence, the state capital, and its access to major highways.
City “management initiatives to spur economic development within the community have contributed to a moderate level of job growth and growth in the tax base the past six years,” Fitch added.
Scott Blake is a PBN staff writer. Email him at Blake@pbn.com.
