S&P Global Ratings Affirms City’s Bond Rating and Changes Outlook to “Positive”
Moody’s Affirms City’s Bond Rating, Retains Negative Outlook
Providence, R.I. – Mayor Jorge Elorza today announced that S&P Global Ratings has affirmed the City of Providence’s outstanding General Obligation (GO) Bond rating at ‘BBB’ and has improved the City’s outlook to ‘positive’ from ‘stable’. Moody’s Investors Service has affirmed the City’s Baa1 Rating and retained the negative outlook while recognizing the improving trend in City Finances.
“The positive outlook assigned by S&P is a clear indication we are heading in the right direction,” said Mayor Elorza. “My administration has been focused on eliminating the City’s deficit, realistic budgeting and finding efficiency in every city department. Our results in FY2016 and FY2017 have lifted the City out of its deficit position and will finally allow us to create a rainy day fund. We will continue to focus on improved budgeting as we increase investments in Providence’s future.”
S&P states that the “outlook revision is based on the city’s improved budgetary performance. Growth in taxable valuations, along with administrative changes and stronger operational controls, have contributed to improved budgetary results and substantially better general fund balances.”
The S&P report also notes that “while we acknowledge the current administration has put stronger financial controls and oversight into place and is improving administrative processes and achieving efficiency gains, we believe overall management conditions remain challenging and tenuous due to past deficits, weak budgetary flexibility, and sizeable long-term liabilities.”
Moody’s notes that the City eliminated the cumulative deficit four years ahead of schedule and is no longer budgeting non-reoccurring revenue items. They went on to cite a robust development pipeline, expanding tax base and active economic development throughout the City as positive credit factors. The Moody’s report also stated that these items combined with continued structural and operationally balanced budgets and building of reserves could be factors that lead to a rating upgrade.
The City held in-person meetings with S&P, Moody’s and Fitch over a 3 day period the week of July 24, 2017. All three rating agencies rate the City.