PROVIDENCE – The city’s bond is holding steady as Moody’s Investors Service affirmed its rating of “A3,” Mayor Brett P. Smiley said Thursday.
Moody’s report, issued on July 30, comes after the credit agency upgraded Providence’s General Obligation Bonds rating from “Baa1” to “A3” last year.
“We have worked diligently to balance our financial operations while making strategic investments in our city's future. This rating is a testament to our diverse economy and prudent approach to managing long-term liabilities,” Smiley said in a statement. “We will continue to focus on making proper investments that strengthen our financial position and benefit all Providence community members, ensuring a stable and prosperous future for our great city.”
“A3” ratings reflect that the issuer has financial backing, cash reserves, and a low risk of default, according to Moody’s ratings scale.
In the report, Moody’s said the city’s outlook is “stable” and it has about $644.8 million in outstanding debt as of the end of fiscal year 2023.
Providence’s rating reflects its “...diverse economy anchored by education and health services and government employment…” and is somewhat offset by the city’s below-average median household income ratio of 78.6%, Moody’s wrote in the report.
Moody’s said the city’s unfunded pension liability remains a “significant long-term risk” though the agency acknowledged Providence’s commitment to addressing it and its “conservative fiscal management.”
“The stable outlook reflects the city's diverse economy that is expected to support sufficient revenue raising ability to maintain balanced financial operations and continue the city's funding commitment to reduce the unfunded long-term liabilities," Moody's said.
Moody’s also maintained its rating of “Baa1” for the city’s outstanding Rhode Island Health and Educational Building Corporation, Providence Public Building Authority and Providence Redevelopment Agency lease revenue bonds.
The rating update was in conjunction with the city’s plans to issue a $125 million Rhode Island Health and Educational Building revenue bond for the construction and renovations of Mary E. Fogarty Elementary School, Frank D. Spaziano Elementary School, and Harry Kizirian Elementary School, said Samara Pinto, deputy press secretary for Smiley.
(UPDATE: Adds comment from mayor's deputy press secretary in 10th paragraph)
Katie Castellani is a PBN staff writer. You may contact her at Castellani@PBN.com.
