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12/4/2014 - Bond Credit Rating Agency Affirms Long-Term Rating of A+ and Stable Outlook for City of Waterbury


On November 11, 2014, Kroll Bond Rating Agency (KBRA) re-affirmed the city’s long-term rating of A+ with a stable outlook to the city of Waterbury following a recent surveillance review.  As part of the surveillance review, KBRA reviewed multiple sources of information on the city’s current financial and economic condition along with speaking to city management.

KBRA’s reaffirmation follows Standard & Poor’s Rating Services upgrade from A to AA- with a stable long-term outlook.  In addition, Fitch Ratings and Moody’s Investors Services last year stood by their previous ratings of city bonds of A+ and A1 respectively, which reflect the city's strong fiscal oversight, formal fiscal policies, and improved financial operations.  The ratings also incorporate the city's sizable equalized net grand list with significant manufacturing and commercial components that serve as major employment centers for the surrounding region.

The key strengths for KBRA’s rating affirmation were based on the city’s positive unaudited results of operations for the fiscal year ended June 30, 2014 along with an understanding of the conservative assumptions used in the city’s current adopted budget.  Both the results of operations and the current adopted budget evidence the continuation of Waterbury’s strong financial management policies and procedures.  City management reported the expectation of continued growth in manufacturing, retail and other new businesses and expansions in the coming months.  City management also provided information on recent significant announcements including the TIGER grant award to the city and the state’s commitment of substantial funding towards Waterbury NEXT downtown redevelopment and transportation improvement initiatives.  

The rating applies to all of the city’s outstanding general obligation bonds which are secured by the full faith and credit of the city.  Waterbury’s direct debt, which includes general obligation debt issued for all purposes, including pension obligation bonds, is $461.8 million as of June 30, 2014.  This affirmation is based on KBRA’s U.S. Local General Obligation Rating Methodology, previously published on May 31, 2012.

The stable outlook reflects KBRA’s expectation that Waterbury will continue to adhere to its strong financial management policies and procedures.  It also reflects the expectation that the city will continue to manage its financial operations to maintain balanced operations and strong reserves.  KBRA will continue to monitor the city’s adherence to its financial management policies as well as its financial position.  Waterbury’s borrowing costs are second-best among Connecticut’s big cities, trailing only Stamford.