City’s second rating upgrade in two-year span
Central Falls, RI – Credit rating agency Moody’s has announced an upgrade to the rating of the city’s general obligation bonds. Moody’s upgraded the city’s rating to Ba2 from Ba3 and reaffirmed the city’s stable outlook.
“This is exciting news for the city and its residents who have worked hard to help the city recover from the corruption and mismanagement of the past,” said Mayor James Diossa. “During my administration, Central Falls has seen several positive ratings and outlook upgrades that reflect the forward direction the city has taken. Gradually we have achieved milestones like this ratings bump that will have longstanding effects on the future of the city.”
"The stable outlook reflects our expectation that the city will continue to adhere to the six-year financial plan adopted in June of 2012 as part of the bankruptcy settlement,” said Moody’s in a statement. “We believe the city will continue to address its long-term pension liabilities by fully funding its annual required contribution (ARC), resulting in a reduced unfunded pension liability. The requirement of the financial plan to allocate most of its operating surpluses to a capital fund will prevent a material increase in operating reserves until after the plan ends in fiscal 2017.”
Moody’s last rating action for Central Falls was in 2014, upgrading the city’s bond rating to Ba3 from B1. This past March, credit rating agency Standard & Poor’s, raised their outlook of the city’s debt to positive from stable and confirmed their BB rating. After today’s adjustment, Moody’s rates Central Falls’ long term general obligation debt at Ba2 with a stable outlook.
Over the last two years, Mayor Diossa’s administration has fostered a culture fiscal responsibility at city hall. During that time, strategic investments made by the city include the establishment of a Capital Improvement Fund and fully funding annual pension costs. In his FY’16 proposed budget, Mayor Diossa continued to introduce prudent budgetary items, including the establishment of a claims reserve account and creating an OPEB Trust to fund retiree health care and start to deal with OPEB liabilities.
Link to Moody's news release here.