Moody's Downgrades Coventry Rating from Aa3 to Al

In anticipation of the pending refunding of existing town debt, Moody's has reduced the Town's bond rating from Aa3 to Al. The rating downgrade reflects growing concern with the State's looming pension crisis and the Town's unfunded pension liability on its Municipal and Police Pension funds.

The rating now states that the Town has a strong capacity to meet its financial commitments, compared to the very strong capacity that is assumed under the Aa3 rating.

The projected impact of recent changes to actuarial assumptions adopted by the Rhode Island Retirement Board and the impact on the Coventry School budget, as well as the current unfunded liability of the Town's Municipal and Police funds were the primary concerns of the rating agency.

The Town's recent resolution increasing the Town's contribution to the plans whenever the Town's General Fund Balance exceeds the 10 percent target as well as a recommendation to earmark the projected savings from the pending refunding to the pension funds were applauded by the rating agency; however these actions were overshadowed by the state pension crisis and were not enough to convince Moody's to hold the Town's Aa3 rating.

The Town's effort to refund existing debt will continue and the projected savings are still considered achievable.