Moody's Upgrades Woonsocket's Bond Rating

WOONSOCKET, RI—The city's improving finances has led to yet another bond rating upgrade.

This time, Moody's Investors Service has upgraded the $153 million of outstanding debt to Ba3 from B2, which "reflects continued financial improvement, including operating surpluses in fiscal 2015 and 2016," according to the ratings summary released Wednesday.

The city's liquidity has increased and the city expects it won't need cash advances to meet its obligations in 2017, according to Moody's.

The uptick is good news for the city because it could translate to lower interest and finances charges associated with its long term debt. It also means the city could refinance some of its debt to lock in lower debt service costs.

In a statement, Woonsocket Mayor Lisa Baldelli Hunt said that the upgrade is "is another signal that our community is in the midst of a significant turnaround."A strong bond rating is an important statement to the business community that will positively affect future investment in the City of Woonsocket. This great news is the result of years of hard work by City residents and City employees who have invested their time and energy into our community”

Still, Woonsocket has some distance to travel.

"The rating also incorporates the challenges the city faces from slow economic growth, weak income levels, a very high debt burden, and substantial unfunded pension and OPEB liabilities," Moody's said.

At the same time, Moody's has revised the outlook on all of the city's debt to "stable" from "positive," which "reflects our expectation that the city will maintain structurally balanced operations."

The city could get another ratings upgrade by growing its general and school fund reserves, increasing liquidity and continuing to make full payments toward its annual pension contributions.

Moody's said a downgrade could happen if operating deficits occur in the General or School Funds, renewed reliance on cash flow borrowing to make debt payments and debt growth in pension and Other Post-Employment Benefits.

This is the second bond rating upgrade in recent months. In June, Fitch Ratings upgraded Woonsocket's outstanding general obligation bond rating from BB- to BBB with a stable outlook.