Moody’s upgrades E. Prov. debt

EAST PROVIDENCE – Moody’s Investors Service has upgraded the general obligation bond rating for East Providence by two levels, to A2, recognizing the city’s continued trend of fiscal stability, increased reserves and stable tax base.

The decision, announced Tuesday, upgraded the city’s standing from the prior rating of Baa1, according to a Moody’s report.

The decision affects about $17 million in outstanding debt. Moody’s also declared the city has a stable outlook.

City officials cheered the news in a press release. “As recently as 2013, the city was considered to be in junk bond status carrying a high default risk. Not only has the city’s bond rating increased, it has jumped an unprecedented two steps, which is well above the norm for Moody’s,” a press release stated.

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City Manager Paul Lemont credited the improved standing to financial discipline. “This is what the taxpayers of East Providence deserve,” he said.

As a result of the improved rating for the city, Moody’s also elevated an underlying rating for the R.I. Health and Educational Building Corp. bond issue, series 2007C, because its ratings followed a “weakest link” approach. East Providence had been the lowest-rated among the pool’s participants. As a result of the city’s improved rating, the RIHEBC bond issue will now be rated at A2, up from Aa3, according to Moody’s.

For East Providence, the stable outlook is an expectation from the rating service that the city will continue to maintain balanced operations and prudent management of finances, including the reserve, while funding the required contributions for pension and other post-employment benefits for its employees.

East Providence ended fiscal 2014 with a sizable $13.8 million operating fund surplus, Moody’s reported, representing a fifth consecutive year of growth. The city has a moderate-sized tax base, which is expected to remain stable despite declines in assessed value. The city also is experiencing a number of development initiatives that were noted in the report. Moody’s cited the redevelopment plan for Village on the Waterfront, which will create 600 multifamily units, and a recently approved project called Kettle Point, which will include 400 residential units and 45,000 square feet of commercial and retail space.

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