Rating Action: Moody's assigns Aa2 to New Rochelle, NY's GO Bonds
Global Credit Research - 25 Jan 2021
New York, January 25, 2021 -- Moody's Investors Service has assigned a Aa2 rating to the City of New Rochelle, NY's $34.5 million Public Improvement (Serial) Bonds, 2021. Moody's maintains the Aa2 issuer rating and general obligation limited tax (GOLT) rating on outstanding parity debt. The issuer rating is the same as the general obligation unlimited tax rating and there is no debt associated with this rating.
RATINGS RATIONALE
The Aa2 reflects the city's stable financial operations with healthy reserve levels, large sized tax base, average wealth levels for the region, and manageable debt burden. While the city was one of the first and hardest hit communities in New York by the coronavirus it's impact on the city's credit profile was minimal. Construction of existing projects was only halted temporarily and the city was able to manage it's expenses to offset revenue declines.
We consider the outstanding debt to be GOLT because of limitations under New York State law on property tax levy increases. The lack of distinction between the Aa2 GOLT rating and the Aa2 issuer rating reflects the city's ability to override the property tax cap and the faith and credit pledge in support of debt service.
RATING OUTLOOK
Moody's typically does not assign outlooks to local government credits with this amount of debt outstanding.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATING
- Continued improvement in reserves and liquidity
- Continued growth in tax base
- Reduction in long-term liabilities
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATING
- Reduction in reserves or liquidity
- Material tax base contraction
- Significant increase in debt burden
LEGAL SECURITY
The GO bonds are payable from the city's general obligation pledge as limited by New York State's Property Tax Cap-Legislation (Chapter 97 (Part A) of the Laws of the State of New York, 2011).
USE OF PROCEEDS
The bonds will provide new money for various projects, most of which will be dedicated to the city's sewer system.
PROFILE
New Rochelle is located approximately 16 miles northeast of midtown New York City in the southeastern portion of Westchester County. It had 79,299 residents as of 2016.
METHODOLOGY
The principal methodology used in this rating was US Local Government General Obligation Debt published in July 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBM_1230443. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.
REGULATORY DISCLOSURES
For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.
For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security 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 credit rating action on the support provider and in relation to each particular credit 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.
Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1243406.
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.
Robert Weber Lead Analyst Regional PFG Northeast Moody's Investors Service, Inc. 7 World Trade Center 250 Greenwich Street New York 10007 US JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Genevieve Nolan Additional Contact State Ratings JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Releasing Office: Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653
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