Downgrade applies to $53.4 million in outstanding rated debt
New York, January 22, 2013 --
Moody's Investors Service has downgraded to Baa2 from A2 the City of Poughkeepsie's
(NY) $53.4 million in outstanding rated debt. The
outlook remains negative.
SUMMARY RATINGS RATIONALE
All of the affected debt is secured by the city's unlimited ad valorem
property tax pledge. The downgrade to Baa2 reflects the city's
negative financial position, expected to remain negative in the
near term, a moderately-sizable tax base with below average
wealth levels, and a high debt burden. The negative outlook
reflects the city's significantly pressured financial position marked
by consecutive operating deficits, ongoing structurally imbalanced
General Fund operations, and narrow liquidity position.
STRENGTHS
- Moderately-sized tax base
CHALLENGES
- Ongoing structural imbalance
- Negative reserve balance
Outlook
The negative outlook reflects the city's significantly pressured financial
position marked by consecutive operating deficits, ongoing structurally
imbalanced operations in the General Fund and a negative reserve position.
While the city has enacted expenditure reductions to begin to address
these issues, Moody's believes the city's financial position will
continue to be pressured in the near term. Going forward,
management's ability to restore structural balance, while maintaining
adequate reserves, will be key to maintaining overall credit quality.
WHAT COULD MAKE THE RATING GO UP (removal of negative outlook)
- Establishment of a trend of GAAP basis operating surpluses
- Demonstration of significant progress towards structural balance
WHAT COULD MAKE THE RATING GO DOWN
- Continuance of structurally imbalanced operations
- Further deterioration in reserve 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 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.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
Valentina A Gomez
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
VP - Senior Credit Officer
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 to Baa2 from A2 for the City of Poughkeepsie's (NY) General Obligation debt; outlook remains negative