Mayor Donald Grebien Announces Bond Rating Upgrade of Pawtucket to the A Rating Category by Fitch Ratings

Pawtucket’s sound financial management, significantly improved finances, growing
reserves, balancing of school budget and pension-OPEB reforms all major factors in
upgrade to first A category rating since 2010.

PAWTUCKET – Mayor Donald R. Grebien today announced that Fitch Ratings has upgraded
the City of Pawtucket’s outstanding General Obligation (GO) Bonds to ‘A+’ and has
assigned a Stable outlook. In addition to upgrading the City’s GO Bond rating,
Fitch has upgraded Pawtucket’s underlying rating or, as Fitch terms it, Issuer
Default Rating (IDR) to ‘A-‘ from ‘BBB+’. According to Fitch, the GO bond rating is
two steps above the IDR, which reflects the enhanced recovery prospects for GO
bondholders afforded by a statutory lien on pledged property tax revenues. The
upgrade comes after a thorough review of the City’s financial and managerial
operations by the rating agency earlier this month in connection with Fitch’s annual
surveillance review of Pawtucket. The upgrade is expected to result in a lower cost
of borrowing for the City on future debt.

«I am greatly encouraged that Fitch recognized, once again, the real progress we
continue to make to improve the City’s fiscal health,» said Mayor Grebien. «I am
proud that today Pawtucket has achieved its first A bond rating from Fitch since
2010. It takes a team, and by working collaboratively with the Pawtucket School
Department and City Council to tighten our operating budgets and control our future
obligations, we are creating real results for the taxpayers and moving Pawtucket
forward. Through proven leadership, we continue to improve the finances of both the
City and School Department while delivering high quality services efficiently and
effectively. While this is great news, the rating upgrade provides us a reminder
that we have more work to do, especially with regards to long-term obligations like
our other post-employment benefits (OPEB), as Fitch points out,» said Mayor Grebien.
«Fitch’s latest upgrade of the City’s bond rating is an acknowledgement that we are
headed in the right direction. We will continue to work every day on behalf of the
taxpayers to improve our bond rating, which will, in turn, lower our cost of
borrowing.»

The Mayor was joined in the presentation to Fitch by Director of Administration
Antonio Pires, Finance Director Joanna L’Heureux, Deputy Finance Director Jeannine
Bourski and the City’s financial advisors, Maureen Gurghigian and Adam Krea of
FirstSouthwest. The Mayor said he «commends the work of Director of Administration
Pires and Finance Director L’Heureux for the comprehensive presentation they made to
Fitch, and more importantly the great work they’ve done on behalf of the City over
the last five years to set the stage for this upgrade. Our multifaceted preparation
presented a full picture of the real progress we’ve achieved together. «The City’s
underlying rating has moved up three notches in the past three years thanks to
everyone’s hard work and common goal of moving the City towards financial health.»

The Fitch report notes that «recent financial performance has been positive,
strengthening the city’s financial flexibility.» However, the report also says «a
notable pension liability in two of the city’s pension plans coupled with a hefty
OPEB liability offsets the low debt burden». To Mayor Grebien’s point about
expectations, the report states that «Fitch expects the city will continue its past
practice of increasing reserves during an economic recovery and managing
expenditures…».

Finance Director L’Heureux said, «Our A category rating factors in the City’s steady
management principles, improved fiscal health and the elimination deficits on the
school side with continuing balanced budgets. The rating also includes our
conservative approach to debt, including capitalizing on programs like the State’s
new Infrastructure Bank, and recently implemented pension and OPEB reforms.»

Maureen Gurghigian, FirstSouthwest Managing Director said, «Achieving the City’s
first A rating in over 6 years is a recognition of the real results the City has
achieved over the past five years. Rating agencies take much longer to upgrade
communities than to downgrade them.» She continued, «Pawtucket has experienced
improved market access over the last five years as evidenced by successful general
obligation bond and note sales, and with a rating in the A category from Fitch now,
we expect the City to continue to realize improved rates offered by investors.» She
noted that investor acceptance of the issuer is an important consideration in the
pricing of municipal bonds. «Upgrades can be expected to increase the number of
potential buyers for the City’s bonds. The marketplace recognizes proven leadership
and results.» Gurghigian added.