BOSTON (Standard & Poor's) March 3, 2015--Standard & Poor's Ratings Services said that it revised the outlook on its long-term rating on Central Falls, R.I.' general obligation (GO) bonds to positive from stable. Standard & Poor's also affirmed its 'BB' long-term rating on the bonds.
"The outlook revision reflects our opinion of the city's ongoing adherence to the established post-bankruptcy plan and improved financial management controls that we believe will likely be sustained and continue to translate into it maintaining stable operations," said Standard & Poor's credit analyst Victor Medeiros. At the same time, we expect the city to remain proactive in funding its long-term liabilities, ensuring those costs and overall budgetary performance remain stable and strong over the long term.
The city's full faith and credit is pledged to the bonds.
"The long-term rating reflects our view that the city's economy and fiscal and management conditions remain weak following its emergence from Chapter 9 bankruptcy," said Mr. Medeiros, "although the active oversight of the city's financial operations and an approved post-bankruptcy operating plan that maintains structural balance alleviate our concerns somewhat."
"The positive outlook reflects Central Falls' ongoing adherence to the bankruptcy plan that we believe will likely continue to translate into it maintaining strong budgetary performance," he added, "while the city remains proactive in funding and executing reforms to its long-term liabilities, ensuring those costs remain stable and strong over the long term."
For us to consider raising the rating, the city would need to demonstrate an adherence to financial plan over the next several years, especially since we expect increasing costs and still-tepid revenue to challenge budgetary performance. In our opinion, the city's stable budgetary environment and continued progress toward funding long-term liabilities would be additional factors in our raising the rating.
Revising the outlook back to stable would be likely if budgetary performance worsened over the two-year outlook horizon or if management somehow faltered in its ability to adhere to bankruptcy plan, thereby affecting our view of its management conditions.
Victor M Medeiros, Boston (1) 617-530-8305
Timothy W Little, New York (212) 438-7999
Link to full release here.
Image credit: Standard & Poor's