S&P Improves Prov’s Bond Rating, Moody’s Gives “Negative” Rating
Friday, August 11, 2017
On Thursday, S&P Global Ratings affirmed the City’s General Obligation Bond rating at ‘BBB’ and improved the City’s outlook to ‘positive’ from ‘stable.’
Moody’s Investors Service affirmed the City’s Baa1 Rating and kept the negative outlook while acknowledging the improving trend in finances.
“The positive outlook assigned by S&P is a clear indication we are heading in the right direction. 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,” said Mayor Jorge Elorza.
S&P says 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 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 says 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 said that these items combined with continued structural and operationally balanced budgets and building of reserves could be factors that lead to a rating upgrade.
Providence Finances - Benchmark Report - 2016
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