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Related Issuers
Rating Action:

Moody's assigns Aaa rating to Westchester County's (NY) $21.5 million General Obligation Refunding Bonds -- 2012 Series A; outlook is negative

Global Credit Research - 19 Jul 2012

Affirms Aaa rating on $991.3 million of general obligation debt and Aa1 rating on $106.9 million of lease revenue debt; outlook is negative

New York, July 19, 2012 --

Moody's Rating

Issue: General Obligation Refunding Bonds, 2012 Series A; Rating: Aaa; Sale Amount: $21,500,000; Expected Sale Date: 8/8/2012; Rating Description: General Obligation

Opinion

Moody's Investors Service has assigned a Aaa rating with a negative outlook to Westchester County's (NY) $21.5 million General Obligation Refunding Bonds - 2012 Series A. Concurrently, Moody's has also affirmed the Aaa rating on $991.3 million of outstanding county and county-guaranteed debt. Moody's has also affirmed the Aa1 rating on $106.9 million in outstanding lease revenue bonds. The outlook on both the general obligation and lease revenue bonds is negative. The general obligation bonds are secured by a General Obligation pledge as limited by the Property Tax Cap - Legislation (Chapter 97 (Part A) of the Laws of the State of New York, 2011). Proceeds from this issue will be used to refinance certain maturities of the county's outstanding bonds for an estimated net present value savings of 4.1% of refunded principal with no extension of maturities.

SUMMARY RATING RATIONALE

The Aaa rating reflects the county's substantial, wealthy and diverse tax base, average and manageable debt burden, and currently adequate financial position that has narrowed over the last several years. The rating also incorporates Moody's belief that the county's substantial tax base will remain healthy over the long term despite the recent adverse impact of the recession, with income and wealth levels remaining well above state and national norms. The Aa1 lease revenue rating balances the aforementioned credit characteristics with satisfactory legal provisions of the lease documents and the essentiality of the financed projects.

The negative outlook reflects the county's structural imbalance in prior years that has driven reserve declines which may limit the county's financial flexibility and ability to respond to mid-year revenue or expenditure fluctuations. In the event of additional future draws on reserves, the county's financial flexibility could become out of line with similarly rated counties that rely on economically sensitive revenues.

Effective January 1, 2012, all local governments in New York State are subject to a property tax cap which limits levy increases to 2% or the rate of inflation, whichever is lower. While school district debt has been exempted from the cap, debt has not been exempted for all other local governments. Moody's believes that the risks associated with the property tax cap remain unchanged and we do not foresee making a rating distinction between debt subject and not subject to the cap. For more information regarding the property tax cap please reference the Special Comment "New York Local Governments' Debt Under New Property Tax Cap to Be Rated the Same as Unlimited Tax General Obligation Debt " released May 14, 2012.

STRENGTHS

-Large and diverse tax base which benefits from proximity to New York City

-Strong socio-economic profile with above-average personal wealth and income levels

CHALLENGES

-Declining financial flexibility given narrowing reserves and a trend of structurally imbalanced operations

-Exposure to economically volatile sales tax revenues

Outlook

The negative outlook reflects the county's structural imbalance in prior years that has driven reserves declines which may limit the county's financial flexibility and ability to respond to mid-year revenue or expenditure fluctuations. In the event of additional future draws on reserves, the county's financial flexibility could become out of line with similarly rated counties that rely on economically sensitive revenues.

WHAT COULD MAKE THE RATING GO UP (REMOVAL OF NEGATIVE OUTLOOK)

-Establishing a trend of structurally balanced financial operations

-Enhancement of financial flexibility

WHAT COULD MAKE THE RATING GO DOWN

- Additional declines in General Fund balance resulting in a material change in reserves.

- Material decline in wealth.

- Material increase in debt.

PRINCIPAL METHODOLOGY USED

The principal methodology used in this rating was General Obligation Bonds Issued by U.S. Local Governments published in October 2009. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

The Global Scale Credit Ratings on this press release that are issued by one of Moody's affiliates outside the EU are endorsed by Moody's Investors Service Ltd., One Canada Square, Canary Wharf, London E 14 5FA, UK, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that has issued a particular Credit Rating is available on www.moodys.com.

For ratings issued on a program, series or category/class of debt, this announcement provides relevant regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides relevant regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides relevant regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

Information sources used to prepare the rating are the following: parties involved in the ratings and public information.

Moody's considers the quality of information available on the rated entity, obligation or credit satisfactory for the purposes of issuing a rating.

Moody's adopts all necessary measures so that the information it uses in assigning a rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Please see the ratings disclosure page on www.moodys.com for general disclosure on potential conflicts of interests.

Please see the ratings disclosure page on www.moodys.com for information on (A) MCO's major shareholders (above 5%) and for (B) further information regarding certain affiliations that may exist between directors of MCO and rated entities as well as (C) the names of entities that hold ratings from MIS that have also publicly reported to the SEC an ownership interest in MCO of more than 5%. A member of the board of directors of this rated entity may also be a member of the board of directors of a shareholder of Moody's Corporation; however, Moody's has not independently verified this matter.

Please see Moody's Rating Symbols and Definitions on the Rating Process page on www.moodys.com for further information on the meaning of each rating category and the definition of default and recovery.

Please see ratings tab on the issuer/entity page on www.moodys.com for the last rating action and the rating history.

The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Dora Lee
Associate Analyst
Public Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

GEORDIE THOMPSON
Vice President - Senior Analyst
Public Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's assigns Aaa rating to Westchester County's (NY) $21.5 million General Obligation Refunding Bonds -- 2012 Series A; outlook is negative
No Related Data.

 

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