S&P Global Ratings lowered its rating on Albany, N.Y.'s general obligation (GO) bonds one notch to 'A+' from 'AA-'. The outlook is negative. At the same time, we assigned an 'A+' long-term rating and negative outlook to the city's 2016 refunding GO bonds.
"The downgrade reflects ongoing uncertainty about the city's finances and a significant weakening of available fund balance amid a period of very weak financial performance," said S&P Global Ratings analyst Rahul Jain. "The rating could be lowered if the city fails to establish a credible plan to address its fund balance deterioration."
The negative outlook reflects our opinion that we could lower the rating further if the city cannot make corrective budgetary adjustments to improve performance and increase reserves to stronger levels. We believe the city continues to face budgetary pressures related to uncertainty over state aid and expired union contracts as well as increasing fixed costs, particularly for retiree benefits.
The city's faith and credit GO pledge secures the 2016 bonds, including the statutory authorization to levy ad valorem taxes on all real property within the city, subject to applicable statutory limitations. Bond proceeds will be used to refund the city's 2009 general obligation serial bonds.
