MOODY'S ASSIGNS Aa2 RATING TO SUFFOLK COUNTY'S (NY) $96.2 MILLION 2010 SERIES A G.O. BONDS AND MIG 1 TO $15.2 MILLION 2010 SERIES A BOND ANTICIPATION NOTES; OUTLOOK IS STABLE

Posted on: May 6, 2010, 4:54 pm

NEW YORK, May 6, 2010 -- Moody's Investors Service has assigned a Aa2 rating to Suffolk County's (NY) $96.2 million Public Improvement Serial Bonds - 2010 Series A and a MIG 1 rating to $15.2 million Bond Anticipation Notes for Various Purposes - 2010 Series A. The rating outlook is stable. Concurrently, Moody's has affirmed the county's Aa2 long-term general obligation rating, affecting $1.06 billion of outstanding rated debt. Both the notes and the bonds are secured by the county's unlimited property tax pledge. The Aa2 long-term rating reflects the strength and diversity of the county's large tax base, which benefits from above average wealth levels and a low debt burden. The rating also factors management's efforts to mitigate a substantial 2009 budget gap, driven by underperforming sales tax revenues, with a combination of recurring and non-recurring revenue enhancements and expenditure cuts, and proactive response to ongoing budgetary pressure. Despite these efforts, financial reserves are projected to have narrowed considerably in fiscal 2009 (year ended December 31st) following sizeable deficits in the prior two fiscal years, resulting in a material weakening of financial flexibility. While economic indicators suggest some stabilization of the regional economy, Moody's believes management will be challenged to replenish appropriated fund balance in the current year, given identification of a sizeable budget gap driven by continued sales tax weakness and expenditure pressure related to growing pension contribution requirements. Future rating reviews will consider the county's ability to restore structurally balanced operations and satisfactory financial flexibility to offset heavy reliance on economically sensitive sales tax revenues, which comprised 47% of fiscal 2008 revenues, and the charter mandated annual appropriation of the county's unreserved General Fund balance...

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