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Coventry loses Moody’s rating after missed audit deadline; council presses administration for plan to restore bond status
Summary
After Moody’s withdrew Coventry’s bond rating when the town missed an audit deadline, council members pressed administration for a checklist and new controls. Officials said completing FY22–FY24 audit materials and the 2025 budget estimate is required before Moody’s will restore the rating.
Coventry officials told the town council on Monday that Moody’s withdrew the town’s bond rating after the municipality missed a reporting deadline for its FY2023 draft financial statements.
Town Manager Perillo said Moody’s had received draft FY22 materials but would not grant an extension for FY23; the agency notified the town the rating withdrawal was effective the morning the council was briefed. "They reached back out in June asking for the same document...Because we weren't able to hit the September 30 deadline, Moody's told us they were going to withdraw our rating," Perillo said, and staff are collecting FY22 finals, FY23 drafts and a FY25 budget overview Moody's requires to reapply.
Vice President LeBlanc urged transparency and stronger controls. "Having this withdrawal...puts us in junk status, makes any future bond more expensive on the taxpayers," he said, and asked that the Moody's checklist be shared with the full council so members can ensure new policies and checkpoints prevent a repeat.
An unidentified expert at the meeting explained the practical effect of a withdrawal versus a downgrade: "In this particular case, it was not a downgrade...In this case, it's been withdrawn," the speaker said, adding that once reporting requirements are met Moody's will typically restore the prior rating level if fiscal indicators are favorable.
Finance staff offered figures the council must weigh as it considers borrowing plans: the town’s unencumbered fund balance was reported at about $16,000,000, and the most recent fiscal year showed an estimated surplus of $1.7 million, but audit restatements and school-side accruals reduced several measures of net position. The auditor general sent a letter after the school reported a roughly $5,000,000 deficit; the auditor general has scheduled an in-person meeting on Oct. 9 to discuss a path forward.
Perillo said the goal is to supply Moody’s with the requested audited FY22 financials, a FY23 draft and the FY25 budget estimate so the town can seek restoration of its rating in time for an anticipated $25 million school bond sale planned for January. "Once we give that to him, there'll be a meeting and we can reapply for our rating," Perillo said.
Council members asked administration to explain what caused audit delays and promised to convene a special meeting if the stated October 31 target for FY23 drafts cannot be met. The council did not take an immediate policy vote but directed staff to provide the checklist and a recovery timeline.
