Affirms Aa3 rating on roughly $7.8 million of outstanding General Obligation debt
New York, December 18, 2012 -- Moody's Investors Service has revised the outlook on the Borough of Lavallette
(NJ) to negative in the aftermath of Hurricane Sandy. We have affirmed
the Aa3 rating on the borough's roughly $7.8 million
of outstanding General Obligation debt, secured by an unlimited
property tax pledge. The borough's gross debt includes $1.94
million of direct General Obligation bonds, $4.9 million
of G.O.-guaranteed sewer bonds, and $970,000
of G.O.-guaranteed water bonds.
SUMMARY RATINGS RATIONALE
The Aa3 rating reflects the borough's moderately sized and wealthy
tax base that is mostly seasonal; a modest debt burden that could
increase based on capital needs, and a solid financial position
characterized by a healthy Current Fund balance and large cash reserves.
The negative outlook incorporates some of the risks the borough faces
in the aftermath of Hurricane Sandy, including the probable increase
in debt burden, potential strains on cash, and long-term
damage to the borough's tax base from destroyed properties.
STRENGTHS:
-Strong financial management with multi-year forecasting
of expenditures
-Solid Current Fund balance and cash levels
CHALLENGES:
- Potential decline in assessed value due to Hurricane Sandy
- Probable increase in debt burden
OUTLOOK
The negative outlook reflects the probable increase in debt burden and
reduction to tax base in the aftermath of Hurricane Sandy. The
borough's ability to cope with these pressures will be an important
factor in its rating going forward.
WHAT COULD CHANGE THE RATING - UP (REMOVAL OF NEGATIVE OUTLOOK)
- Buildup of fund balance to higher levels
-- Rebuilding of tax base after Hurricane Sandy
WHAT COULD CHANGE THE RATING - DOWN
-Draw-down of fund balance to levels no longer consistent
with peers
- Reductions to AV larger than those currently contemplated
-- Increase in debt burden larger than that currently contemplated
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.
Dan Seymour
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
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 revises outlook on the Borough of Lavallette (NJ) to negative in the aftermath of Hurricane Sandy