Moody’s Investors Service revised Collingswood’s rating direction to uncertain from downgrade review, but maintained its Ba1 junk-bond rating on $28 million of outstanding long-term general obligation debt.
In September, the rating agency dropped the southern New Jersey borough’s rating six notches to Ba1 and placed it under review for possible downgrade, questioning whether Collingswood could make payments within 30 days on its notes.
The borough is a guarantor on loans for a condominium development project that got hit by the recession and related housing downturn. Collingswood, which has a population of 14,000, faces a GO liability of $4.5 million.
Moody’s based its outlook change on the potential upside to Collingswood’s credit risk profile as it works toward possibly finalizing a financing plan with less execution risk to meet its guaranteed obligation.
The borough plans to avoid issuing long-term GOs and exposure to market access, and may instead issue short-term bond anticipation notes to fulfill its guarantee.
Though the plan may improve its credit in the near term, uncertainty remains, Moody’s said.