NEW YORK - Moody's Investors Service said it has downgraded Pollution Control Financing Authority of Camden County, N.J., to Ba2 from Baa3 and has placed the rating under review for possible downgrade. The downgrade affects $35.2 million of outstanding solid waste revenue bonds, series 1991.
The authority's solid waste system does not generate sufficient revenues to pay its debt service obligations and has been reliant upon aid from the state of New Jersey (GO rated Aa3/negative) since 1999 to meet its debt service obligations.
The rating downgrade and the placement of the rating under review is based upon the decreasing amounts of debt service support from the state over the past three years, the uncertainty as to the state's commitment and ability to support the final year of debt service which includes a substantial balloon payment in the face of many competing financial pressures and the authority's weakened financial condition.
Resolution of the review for downgrade will focus on the state's willingness and ability to continue supporting authority debt through maturity. In Moody's view it is unlikely that the authority will have the ability to generate sufficient revenues to fund operations, debt service as well as rebuild liquidity should state support of debt service continue to decline or disappear altogether.
A multi-notch rating downgrade is possible, depending on the timing and extent of state support and the authority's financial condition. The authority has completely drawn down on its debt service reserve fund and has very limited liquidity.
