Moody's upgrades outlook on Pawtucket's bond rating to stable

Moody's upgrades outlook on Pawtucket's bond rating to stable

PAWTUCKET - Moody's Investors Service last week affirmed the Baa2 rating on Pawtucket's $34.9 million in long-term general obligation bond borrowing. The outlook for the city was changed from "negative" to stable.

The Baa2 reflects the city's moderate tax base with weak wealth and income levels but an improving financial position brought about in part by a reduced deficit for city schools. The rating also factors in the recent funding of 100 percent of the city's annual required pension contribution, a pending funding improvement plan, and a relatively low debt burden.

"The stable outlook reflects our belief that the city will maintain improved operating position, elimination of cash flow borrowing and full funding of the locally administered pension annual required contribution with a pending funding improvement plan to reduce its unfunded liability," states the rating service in an announcement.

Among the challenges still facing the city, according to Moody's, are an accumulated deficit for the schools, weak socioeconomic wealth and income data and large unfunded pension and retirement health insurance liabilities.

Upgrades to bond ratings are important in part because they allow communities to borrow money at cheaper rates.