MOODY'S UPGRADES THE RATING OF THE DORMITORY AUTHORITY OF THE STATE OF NEW YORK, NYSARC, INC. INSURED REVENUE BONDS, SERIES 2001 TO A2 FROM A3

Posted on: December 11, 2009, 2:44 pm

NEW YORK, Dec 11, 2009 -- Moody's Investors Service has upgraded the rating of the Dormitory Authority of the State of New York (DASNY) NYSARC, Inc. Insured Revenue Bonds, Series 2001 to A2 from A3, two notches lower than the State of New York (general obligation rating of Aa3). The A2 rating reflects the structure of the credit, whereby the state appropriates funds to various state agencies which, in turn, pay NYSARC in accordance with contract and reimbursement arrangements. The largest funding source for NYSARC is the New York State Office of Mental Retardation and Developmental Disabilities (OMRDD). The bonds are special obligations of DASNY payable from payments made by NYSARC under a loan agreement. NYSARC pledges certain of its revenues, which include the money received from the state agencies for contract and reimbursement arrangements, and which would otherwise be payable to NYSARC's participating chapters. Importantly, NYSARC has assigned these revenues to DASNY to satisfy its obligations under the loan agreement to pay debt service, and pursuant to the resolution, these revenues and DASNY's right to receive them have been pledged to the trustee. These assignments, together with the ability to intercept the public funds, insulates the payments from NYSARC's operations and management. A debt service reserve fund provides additional bondholder protection...

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