Oct 24 (Reuters) - Moody's Investors Service late on Wednesday said it raised East Providence, Rhode Island's general obligation bond rating by one notch to Baa3 from Ba1, bringing the rating back into investment grade territory.
The outlook was also revised to positive from stable.
The upgrade to investment grade reflects the city's improved financial position, after the dissolution of the state appointed budget commission, the rating agency said in a statement.
In addition, the new rating reflects the city's increased reserve levels, improved cash flow and implementation of policies to ensure fiscal stability.
East Providence has also reduced the unfunded liability in its self-administered pension plan after a one-time infusion of proceeds from the city's share of a $500 million nationwide settlement Google Inc. paid to resolve U.S. Department of Justice charges it allowed Canadian pharmaceutical companies improperly to target U.S. consumers with online ads.
The city, along with most Rhode Island local governments, has struggled with its pension funding in recent years.
Moody's said the city's financial position will likely continue to improve over the near term, as it addresses the long-term liabilities for pensions and retiree healthcare and other benefits, which has resulted in a positive outlook.
Earlier this month, Standard & Poor's Ratings Service also raised the city's GO rating, by five notches to A from BB-plus, citing the rating agency's revised local GO criteria, the city's improving finances, and East Providence's lower long-term pension liabilities.