Moody’s Investors Service says Providence will benefit from winning approval of its deal with retirees to reduce pension and health care costs, but warns the agreement will still leave the capital city facing huge unfunded retirement liabilities.

“Providence’s total unfunded liability for pension and OPEB will be reduced to $2.1 billion, or 20.7% of its property tax base, still one of the largest unfunded liabilities in the state, exceeding those of the financially distressed cities of Central Falls and Woonsocket,” Moody’s analysts Vito Galluccio and Geordie Thompson write in a report Tuesday. (OPEB stands for other post-employment benefits, primarily retiree health care.)

To demonstrate their point, Galluccio and Thompson put together this chart:

R.I. Superior Court Judge Sarah Taft-Carter’s March 11 ruling on the fairness of the deal “is a credit positive for Providence because it signals that the court is likely to approve the pending agreement,” Galluccio and Thompson write. If the deal wins final approval on April 12, it will reduce Providence’s unfunded pension liability by $196 million and its unfunded OPEB liability by $400 million, according to Moody’s.

Providence spent more than a quarter of its budget on pension contributions, retiree health benefits and debt payments in the 2011-12 fiscal year, Moody’s notes.

• Related: Chart: The decline and fall of the Providence pension system (Jan. 25, 2012)