Fitch affirms Pawtucket's bond rating; outlook goes positive

Fitch affirms Pawtucket's bond rating; outlook goes positive

PAWTUCKET – Fitch Ratings, a major credit rating agency, recognized Pawtucket’s improving financial position last week by affirming the city’s bond rating at its current investment grade while raising its rating outlook from stable to positive.

“This is indeed very good news for our residents and taxpayers and shows we are continuing to move in the right direction,” said Mayor Donald Grebien in a statement.
Fitch Ratings left intact its BBB- rating on $14.9 million of general obligation bonds, citing increased revenues and expenditure cuts that have helped to stabilize city operations, “reasonable” management projections for further improvements, ongoing balanced budgets on the municipal side of operations, and the city’s projection of an operational surplus for the current budget year.

Representatives from the ratings agency also like that city officials are no longer relying on short term borrowing for cash flow purposes, that they are fully funding annual required contributions toward city pensions, have achieved low debt levels for a community of Pawtucket’s size, and are putting more into reserves. The reserve account has jumped from $2.8 million to $5.2 million, or a “moderate” 4.9 percent of municipal spending, reversing a prior negative trend that persisted before Fiscal Year 2012.

The report noted the ongoing plan to address prior year deficits in the Pawtucket School Department which is projecting positive operating results for its final audit of Fiscal Year 2013.

“A trend of positive school fund operations could lead to positive rating movement,” states the Fitch report. “Timely elimination of the deficit balance is paramount.”
The full report, issued Nov. 19, is available at www.fitchratings.com .