WARWICK– S&P Global Ratings has assigned an “AA” long-term rating for Warwick’s general obligation bonds, re-affirming its “AA” long-term rating on existing debt, and the outlook on all ratings as stable, despite the COVID-19 pandemic’s affect on local economies.
In its assessment, the firm cited the City’s “very strong” economy, strong budgetary flexibility, and “very strong” liquidity and debt and contingent liability position as factors in its decision.
The report also credited the assessment in part to the City’s “slight” operating surpluses in the general fund and at the total governmental fund level in fiscal 2019. It lauded Warwick’s strong budgetary flexibility, with an available fund balance in fiscal 2019 of 9.3 percent of operating expenditures.
The improved reserve funds and the reported surplus were, in part, the result of the city’s recent property tax revaluation, which increased the net tax base about 14.8 percent over FY19, generating about 3.46 percent more than the FY19 net tax levy amount.
The report said the rating may ebb or flow depending on whether Warwick builds or draws down its fund balance.
Warwick finances skirt pandemic economics, so far
Though Warwick’s outlook is currently strong despite the pandemic, that good fortune isn’t guaranteed as the disease’s affect on the economy continues to spread.
“We believe management’s work to resolve recent budgetary shortfalls leaves it in a better position to manage the current recessionary pressures. Our outlook is generally for two years, but we see some risks due to the COVID-19 pandemic and U.S. recession over the next six-to-12 months. There remains significant uncertainty stemming from the potential effects of the COVID-19 pandemic and the related economic recession, resulting in unknown and unquantifiable potential revenue and expenditure pressures. We have incorporated this uncertainty into our view of the city’s budgetary performance and overall creditworthiness,” the report states.
“I am very pleased that S&P has recognized our ongoing efforts to ensure the fiscal health of our community, despite the many challenges that COVID-19 has presented us,” said Warwick Mayor Joseph J. Solomon. “My administration will continue to work diligently to make sure that we are positioned well financially now, and long after the pandemic subsides.”
“S&P Global Ratings assigned its ‘AA’ long-term rating to the Rhode Island Health&Educational Building Corp.’s series 2020C revenue bonds, issued for Warwick, and affirmed its ‘AA’ long-term rating on the corporation’s existing debt also issued for the city. At the same time, we affirmed our ‘AA’ long-term rating on the city’s general obligation (GO) debt. The outlook on all ratings is stable,” the report reads.
The full S&P report is embedded here: S&P-Report-Warwick-2020