The control board of financially troubled Nassau County, N.Y., is expected to come to market with $313 million of triple-A rated refunding bonds on Wednesday.
The Nassau County Interim Finance Authority will sell $130 million of tax-exempt sales-tax secured bonds and $180 million of taxable sales-tax secured bonds.
Goldman, Sachs & Co. is the lead underwriter and Hawkins Delafield & Wood LLP is bond counsel.
The tax-exempt bonds will have maturities from 2015 through 2023, and the taxable bonds will mature from 2014 through 2023. Both series will be subject to early redemption.
The proceeds are expected to refund NIFA’s Series 2003, 2003A and 2004H sales-tax bonds outstanding for debt service savings that would permit greater sales tax revenue transfers to Nassau County.
The bonds are secured by the county’s 4.25% local sales tax, less a 1/4% allocation to towns and cities and a 1/12% allocation to the villages. Sales taxes are paid first to NIFA for payment of debt service and the county receives its share after payment of authority expenses.
In assigning triple-A ratings, both Standard & Poor’s and Fitch Ratings cited the debt’s strong security in the sales tax revenues, as well as strong debt-service coverage and a diverse economy from which revenues are drawn.
Since NIFA’s ability to make payments on the bonds depends on the county’s economic viability, the rating cannot be completely delinked from the rating on the county’s general obligation debt, S&P analysts said.
“However, Standard & Poor’s believes that Nassau County’s economic base will be able to generate sufficient sales tax revenues to cover debt service on the bonds even under stressful conditions,” analysts said.
Nassau County, located east of New York City on Long Island, is rated A-plus by both S&P and Fitch.
Further down the credit spectrum, the Nassau County Local Economic Assistance Corp. is also expected to come to market Wednesday.
The agency will sell $132 million of revenue bonds, structured as serial and term, for the Winthrop-University Hospital Association to refund outstanding bonds and finance the construction of a new research building.
Goldman is also lead underwriter for the deal and Winston & Strawn LLP is bond counsel.
The bonds are secured by a mortgage on the core acute-care facilities and fixtures and a pledge of gross receivables of the hospital, a 59-licensed bed tertiary medical center located in Mineola. Its total operating revenue in 2011 was $942.1 million.
The new, five-story, 95,000 square-foot research building will be designated primarily for research and academic programs.
Garry Schwall, chief operating officer at the hospital, said the total construction costs are estimated at $59 million.
“The actual groundbreaking, or a digging a hole for the new research building, will probably be in early November,” Schwall said. Construction will take around 24 months to complete.
Moody’s Investors Service assigned the bonds a Baa1 rating, based on the hospital’s size and breadth of services as a teaching hospital.
“The rating also reflects relatively stable performance, providing good debt service coverage of a manageable debt burden as the organization adds leverage to fund a large research facility that will be the anchor of its research mission,” analysts said.
Moody’s also cited the hospitals low cash-flow margin, low level of liquidity, and large amount of indirect debt.
Fitch assigned an equivalent BBB-plus, also citing the hospital’s operating performance, in addition to its leading inpatient market share.
