A3 rating affects $5.8 million of rated long-term general obligation debt outstanding
New York, December 18, 2012 -- Moody's Investors Service has downgraded the Borough of Seaside Heights,
NJ to A3 from A2, affecting $5.8 million in outstanding
Moody's rated bonds. The bonds are secured by the borough's
general obligation, unlimited tax pledge.
SUMMARY RATING RATIONALE
The downgrade to A3 reflects our expectation of financial pressure from
increases to an already high debt burden to pay for Hurricane Sandy recovery
costs and projected 2013 declines in beach-related revenues,
which constitute a significant 41% of total Current Fund revenues,
as the borough works to rebuild. The A3 rating also incorporates
the borough's limited, declining tax base and below-average
wealth levels.
STRENGTHS
-Improved financial position with structurally balanced operations
in recent years
- Healthy utility operations with strong liquidity
CHALLENGES
- Significant reliance on tourism-related revenues
-Additional short-term borrowing related to post-hurricane
boardwalk reconstruction will increase already high debt burden
-Loss possible in the ratable tax base due to the storm and ongoing
tax appeals
-Limited tax-base with below-average wealth levels
WHAT COULD CHANGE THE RATING UP
-Stable financial operations in 2013
-Limited decline in tourism-related revenues
--Limited decline in tax base
-- Stable debt burden and debt service costs
-Adequate market access for short-term notes
WHAT COULD CHANGE THE RATING DOWN
-- Strained liquidity that would necessitate cash-flow financing
-Significant deterioration of the township's tax base and wealth
indicators
-Material weakening of the borough's financial position
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
For ratings issued on a program, series or category/class of debt,
this announcement provides certain 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 certain 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 certain 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.
Please see the credit ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
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.
Josellyn Yousef
Asst Vice President - 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
Julie Beglin
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 downgrades the borough of Seaside Heights' (NJ) long-term G.O. rating to A3 from A2 following impacts of Hurricane Sandy