Moody’s upgrades Cranston’s bond rating

By Daniel Kittredge
Posted 5/25/16

Moody’s Investors Service has upgraded its rating on Cranston’s general obligation debt, Mayor Allan Fung announced this week.

The A1 rating is the highest the city has received in “several …

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Moody’s upgrades Cranston’s bond rating

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Moody’s Investors Service has upgraded its rating on Cranston’s general obligation debt, Mayor Allan Fung announced this week.

The A1 rating is the highest the city has received in “several decades,” according to a statement from the mayor’s office. The administration had requested a rating review as it plans refinancing of existing bonds, and “substantial savings” are expected as a result of the upgrade.

“This upgrade is fantastic news. We’ve come a long way and restoring fiscal accountability to the city of Cranston has been a priority of my administration,” Fung said through the statement.

According to a statement from Moody’s, the A1 rating “reflects the [city’s] sizeable and diverse tax base with above average demographics, improved financial position with adequate reserves, manageable debt burden, and large unfunded pension liability.”

The mayor said Moody’s “particularly recognized our work in eliminating the multi-million dollar school debt and the ‘stark improvement’ in our Rainy Day Fund.”

In addition to the expected refinancing savings, he said the city would realize reduced borrowing costs for road and infrastructure projects in the future.

The Moody’s upgrade is the latest in a series of positive developments in terms of the city’s bond rating in recent years. In 20015, Standard & Poor’s Ratings Service upgraded Cranston’s rating to AA- with a stable outlook. The year before, S&P had reaffirmed it’s A rating on the city’s long-term debt.

Fitch Ratings last year also expressed growing confidence in Cranston, reaffirming its A rating on the city’s long-term debt and upgrading its outlook from stable to positive.

The agency found the city’s “financial flexibility could strengthen due to growth in the tax base and recent stabilization of city and school fund financial operations.”

While the city’s unfunded pension liability was cited as a concern, Fitch noted that “recent pension reform efforts have controlled annual required contributions (ARC),” and “after traditionally underfunding its payment of the ARC, the city has begun making full payment.”

Moody’s in 2014 reaffirmed the city’s A2 bond rating and removed its negative outlook for the community’s debt obligations.

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