Follows downgrade of State of New Jersey's GO rating to A1 negative from Aa3 negative
New York, May 15, 2014 -- Moody's Investors Service has downgraded the New Jersey Municipal and
School Qualified Bond Act financing-level ratings to A2 from A1.
There has been no rating action on the A2 enhanced ratings for Jersey
City and North Bergen Township. The outlook on three issuer's
enhanced ratings (Bayonne City, Jersey City and City of Orange Township)
have been changed to Rating Under Review with downward pressure;
the remaining outlooks on the enhanced ratings remain negative.
This action affects financing-level enhanced ratings supported
by the program. The program's rating and outlook are directly linked
to the state's general obligation bond rating (the State of New Jersey
was recently downgraded to A1 negative outlook - see report dated
May 13, 2014). The A2 programmatic rating is one notch below
the state's rating based on our assessment of state commitment,
program history and mechanics.
Additionally, we have downgraded to MIG 2 from MIG 1 the outstanding
Bond Anticipation Note ratings for the cities of Paterson and Trenton,
as their takeout bonds are authorized to utilize the qualified bond act
program.
The program enables participating municipalities and schools to divert
a portion of their annual state aid to a trustee to ensure timely debt
service payments and thereby prevent debt service obligations from competing
with other local expenditure priorities. Although most bonds issued
under the program have an enhanced rating at the same A2 level as the
programmatic rating, we have placed three issuers ratings under
review with downward pressure to assess their state aid coverage on MQBA
authorized debt. We may assign an A3 enhanced rating to certain
debt issued under the program if state aid does not amply cover qualified
debt service.
Today's rating action on the MQBA-related ratings is not
a rating action on the Chapter 72 reserve program, which enhances
debt issued by local NJ school districts.
Below is a list of municipalities with outstanding qualified bonds affected
by this action along with their underlying and enhanced ratings.
Their underlying ratings, based on their own credit quality,
are not affected by the change in the Qualified Bond Act rating and outlook.
» City of Bayonne - enhanced rating: A2/ RUR down;
underlying rating: Baa1/ stable outlook
» City of East Orange - enhanced rating: A2/ negative
outlook; underlying rating: A2/ stable outlook
» Town of Harrison - enhanced rating: A2/ negative outlook;
underlying rating: Ba1/ positive outlook
» Township of Irvington - enhanced rating: A2/ negative
outlook; underlying rating: Ba1/ negative outlook
» City of Jersey City - enhanced rating: A2/ RUR down;
underlying rating: A2/ positive outlook
» Town of Kearny - enhanced rating: A2/ negative outlook;
underlying rating: A2/ negative outlook
» City of Newark - enhanced rating: A2/ negative outlook;
underlying rating: A3/ ratings under review
» Township of North Bergen - enhanced rating: A2/ negative
outlook; underlying rating: Aa3
» City of Orange Township - enhanced rating: A2/ RUR
down
» City of Paterson - enhanced rating: A2/ negative outlook;
underlying rating: Baa2/ negative outlook
» City of Perth Amboy - enhanced rating: A2/ negative
outlook; underlying rating: Baa1
» City of Plainfield - enhanced rating: A2/ negative
outlook; underlying rating: A1/ negative outlook
» City of Salem - enhanced rating: A2/negative outlook;
underlying rating: Ba3/stable outlook
» City of Trenton - enhanced rating: A2/ negative outlook;
underlying rating: A3/stable outlook
» Township of Weehawken - enhanced rating: A2/negative
outlook; underlying rating: Baa3
» City of Union City - enhanced rating: A2/ negative
outlook; underlying rating: A3
» Town of West New York -- enhanced rating A2/ negative outlook;
underlying A1
Additionally, we have downgraded to MIG 2 from MIG 1 the outstanding
MQBA eligible Bond Anticipation Note ratings for the following entities:
» City of Paterson - underlying rating: Baa2/ negative
outlook
» City of Trenton - underlying rating: A3/stable outlook
These notes are secured with each city's unlimited general obligation
pledge as well as takeout bonds which are authorized to utilize the Municipal
Qualified Bond Act enhancement.
RATING METHODOLOGY
The principal methodology used in the enhanced rating was State Aid Intercept
Programs and Financings: Pre and Post Default published in July
2013. The principal methodology used in the short term rating was
US Bond Anticipation Notes published in April 2014. Please see
the Credit Policy page on www.moodys.com for a copy of these
methodologies.
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.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
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.
Vito Galluccio
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 A 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 NJ Municipal and School Qualified Bond Act financing-level enhanced ratings to A2 from A1