Moodys.com
Close
Please Note
We brought you to this page based on your search query. If this isn't what you are looking for, you can continue to Search Results for ""
The maximum number of items you can export is 3,000. Please reduce your list by using the filtering tool to the left.
Close
Close
Email Research
Recipient email addresses will not be used in mailing lists or redistributed.
Recipient's
Email

Use semicolon to separate each address, limit to 20 addresses.
Enter the
characters you see
Close
Email Research
Thank you for your interest in sharing Moody's Research. You have reached the daily limit of Research email sharings.
Close
Thank you!
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
New Issue:

MOODY'S ASSIGNS Aa2 RATING WATERFORD'S (CT) $14 MILLION GO BONDS AND MIG 1 TO $51.4 MILLION GO BOND ANTICIPATION NOTES

25 Jul 2011

RATING AFFECTS $35 MILLION IN OUTSTANDING PARTIY DEBT

Municipality
CT

Moody's Rating

ISSUE

RATING

General Obligation Bonds, Issue of 2011

Aa2

  Sale Amount

$14,000,000

  Expected Sale Date

08/02/11

  Rating Description

General Obligation

 

General Obligation Bond Anticipation Notes, Series 2011

MIG 1

  Sale Amount

$51,350,000

  Expected Sale Date

08/02/11

  Rating Description

Bond Anticipation Notes

 

Opinion

NEW YORK, Jul 25, 2011 -- Moody's Investors Service has assigned an Aa2 rating to the Town of Waterford's (CT) $14 million General Obligation Bonds, Issue of 2011 and a MIG 1 rating to $51.4 million General Obligation Bond Anticipation Notes (BANs) (dated 8/11/2011, due March 20, 2012). Concurrently, Moody's has affirmed the Aa2 rating on $35 million of outstanding general obligation debt. The bonds and the notes are secured by the town's unlimited ad valorem tax pledge. Bond and note proceeds will refund maturing notes for elementary school renovations and additions and finance additional projects pertaining to the town's other school construction projects.

SUMMARY RATING RATIONALE

The Aa2 rating reflects the town's demonstrated ability to manage the fiscal impact of significant taxpayer concentration while maintaining healthy reserve levels and operating stability over a long-term period. The long-term rating also factors the town's sound financial position and healthy reserve levels guided by formal fiscal policies and the stabilization of the town's taxable valuation following the settlement of a multi-year appeal from the largest taxpayer, a nuclear power plant. The MIG 1 rating reflects the aforementioned underlying long-term credit characteristics with the town's demonstrated history of market access.

STRENGTHS

-Satisfactory financial reserves

-Stable, moderately-sized tax base

CHALLENGES

-Maintenance of financial reserves despite aggressive pay-go support of ongoing capital projects

DEMONSTRATED MARKET ACCESS FOR NOTES

The town remains a frequent borrower in the short-term debt market. Solid market access was demonstrated at the last public note sale, August 2010, at which the town received six bids. Previously, the town received four bids for its 2009 note sale and five for its 2008 sale. This strong level of market access is expected to allow the town to roll the current notes at maturity (3/20/2012) or to refinance them with long-term debt.

SIZABLE AND HIGHLY CONCENTRATED TAX BASE EXPECTED TO REMAIN STABLE

Waterford's tax base has stabilized and benefits from ongoing growth following the significant valuation decline of its largest taxpayer, Dominion Nuclear Connecticut's (Dominion Resources Inc. - Sr. Unsec. Baa2/Stable) Millstone Power Station. Effective fiscal 2003, the town's net taxable grand list declined 40% to $1.9 billion (from a peak $3.2 billion in the prior year) due to the deregulation of the nuclear power industry and the resulting depreciation of the plant's property. Following the significant loss of value tied to the power plant, the town's net taxable grand list increased by a healthy 30% in fiscal 2004 with town-wide reassessment. Most recent five-year average growth from fiscal 2006 through 2010 has since remained stable at 3.2% due to ongoing commercial and residential development. Additionally, Dominion annually appealed its $1.2 billion tax assessment and exercised its statutory right to pay only a portion of the annual tax levy billed by the town. Effective fiscal 2009 and concurrent with the town's five-year reassessment cycle, the town reached a settlement with Dominion that secures its current tax assessment at $1.07 billion. Prior to deregulation, the Dominion plant represented approximately 85% of the tax base; while the plant now comprises a more moderate 30%, the town's tax base remains concentrated in this single taxpayer. Town officials report that the plant's long-term operating stability is confirmed by its integral role in regional power production - producing approximately 35% of power in the State of Connecticut (G.O. rated Aa2/Negative) - and by the recent 20-year extension of the plant's federal license.

Following the town's reassessment in fiscal 2009, assessed value has remained stable with annual increases of less than 1%. Equalized net grand list (ENGL) for fiscal 2010 totaled $5 billion down slightly from the prior year due to the state's equalization calculation. As such, the continuing growth, albeit minimal, in the town's assessed value ($3.7 billion for fiscal 2012) is a better indication for tax base health.

The town's emergence as a regional retail center is anchored by the one million square-foot Crystal Mall, recently-constructed retail-lifestyle centers, and a local transportation network that includes Interstates 95 and 395. A majority of town residents commute to regional employment hubs anchored by health science, naval defense, and gaming; recessionary contraction in various sectors has increased town unemployment to 9.0% as of April 2011, above historical averages but still below the statewide 9.1% rate.

HEALTHY FINANCIAL POSITION SUPPORTED BY FISCAL POLICIES AND LONG-TERM PLANNING

The Town of Waterford's conservative budgeting approach and prudent management practices have contributed to the maintenance of a healthy financial position during recent years, despite revenue pressures related to deregulation and the multi-year assessment appeal of its largest taxpayer. During fiscal 2008, the town reached a settlement with Dominion that secures the plant's tax assessment going forward and stabilizes the financial operations of the General Fund. In June 2008 the town received $9.25 million in prior-year tax withholdings from Dominion, replenishing the majority of previous fund balance draws. The balance of unrealized tax revenues from fiscal 2004 to 2007 was offset by the one-time receipt of an additional $3.2 million in System Benefit Charge (SBC) revenues during fiscal 2009. The SBC is a state-managed revenue source established to mitigate the impact of deregulation by providing the town with a revenue subsidy that incrementally declines by 10% annually, beginning in fiscal 2003 and ending in fiscal 2011, to allow for a phase-in of the tax-loss impact due to deregulation.

Since its peak in fiscal 2008, the town has opted to use a portion of its ample reserves towards transfers to its Capital and Nonrecurring Expenditure Fund to defray costs of its school building project and minimize additional borrowing per the town's established plans to apply one-time Dominion funds to non-recurring uses. Outside of these transfers, the town has remained structurally balanced with operating surpluses offsetting the impact of the capital transfers on reserves. Fiscal 2010 ended with a healthy unreserved fund balance of $10.5 million or 14.4% of General Fund revenues, albeit below its fiscal 2008 peak of $19.4 million or 25% of revenues.

At the close of fiscal 2011 (fiscal year end June 30), the town anticipates an operating deficit of approximately $262,000 which inclusive of a $1.8 million capital transfer and unanticipated increases in pension costs. While preliminary fund balance figures are unavailable due to the implementation of GASB 54, the town intends to establish a Stabilization Fund of at least 13% of expenditures which is consistent with their prior policy.

The fiscal 2012 budget, a 3.2% increase over the prior year, is balanced with a 5% property tax increase and no use of fund balance. The budget also includes the continuation of capital transfers of $1.7 million and the loss of $1 million SBC subsidy. Going forward, the town continues to address a $2 million deficit in its self-insurance fund and continued increases in its state-administered pension plan projected to be in the range of 25% annually.

MANAGEABLE DEBT BURDEN SUPPORTED BY PAY-AS-YOU-GO CAPITAL FUNDING

Moody's anticipates that the town's overall debt burden, at 1.7% of the ENGL, will remain manageable despite future borrowing plans, given a comprehensive six-year capital program that includes a substantial pay-as-you-go component. The current offering is part of the town's comprehensive school expansion and renovation program, which includes pay-go funding of $27.8 million and local bonding of $105.1 million over a multi-year period, including debt issuances through 2016. The town annually dedicates 2 mills of its tax rate for debt service and pay-go capital projects, including $1.7 million budgeted in fiscal 2012. Moody's believes that the significant role of pay-go funding, continuing adherence to adopted fund balance policies, and the currently low debt burden will allow the town to accommodate the planned additional borrowing without a material impact on credit quality. Amortization of principal is below average, with 55% retired within 10 years, however in line with the useful life of the assets being financed. All outstanding debt is fixed-rate and the town is not party to any derivative agreements.

WHAT COULD MAKE THE RATING GO UP

-Significant improvement of the underlying tax base

-Sizeable fund balance growth

WHAT COULD MAKE THE RATING GO DOWN

-Significant financial deterioration

-Decrease in tax base

KEY STATISTICS

2010 population: 19,517

Fiscal 2010 Equalized Net Grand List: $5 billion

1999 Per Capita Income: $26,807 (93% of the state, 124% of the U.S.)

1999 Median Family Income: $65,659 (100% of the state, 131% of the U.S.)

Debt burden: 1.7%

Payout of principal (10 years): 55%

FY 2010 Total General Fund balance: $11.1 million (15.3% of revenues)

FY 2010 Unreserved General Fund balance: $10.5 million (14.4% of revenues)

Long-term G.O. debt outstanding: $49.1 million

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

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 credit 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 ratings tab on the issuer/entity page on Moodys.com for the last rating action and the rating history.

The date on which some Credit Ratings were first released goes back to a time before Moody's Investors Service's Credit Ratings were fully digitized and accurate data may not be available. Consequently, Moody's Investors Service 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 the Credit Policy page on Moodys.com for the methodologies used in determining ratings, further information on the meaning of each rating category and the definition of default and recovery.

Analysts

Dora Lee
Analyst
Public Finance Group
Moody's Investors Service

Geordie Thompson
Backup Analyst
Public Finance Group
Moody's Investors Service

Naomi Richman
Senior Credit Officer
Public Finance Group
Moody's Investors Service

Contacts

Journalists: (212) 553-0376
Research Clients: (212) 553-1653


Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
USA

MOODY'S ASSIGNS Aa2 RATING WATERFORD'S (CT) $14 MILLION GO BONDS AND MIG 1 TO $51.4 MILLION GO BOND ANTICIPATION NOTES
No Related Data.
© 2019 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND ITS RATINGS AFFILIATES (“MIS”) ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MOODY’S PUBLICATIONS MAY INCLUDE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY’S OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. CREDIT RATINGS AND MOODY’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY’S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY’S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

MOODY’S CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS OR MOODY’S PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.

ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.

CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.

All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit 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 or in preparing the Moody’s publications.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.

NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.

Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any rating, agreed to pay to Moody’s Investors Service, Inc. for ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and MIS also maintain policies and procedures to address the independence of MIS’s ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.

Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any rating, agreed to pay to MJKK or MSFJ (as applicable) for ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

​​​​​​
Moodys.com