NEW YORK - Moody's Investors Service said it has upgraded Collingswood Borough, N.J.'s long-term general obligation rating to Baa3 from Ba1.
The action affects $30.6 million of outstanding long-term debt secured by the borough's general obligation unlimited tax pledge. The previous rating of Ba1 was placed under review with direction uncertain on March 5, 2012. This action resolves that review.
The upgrade of the borough's rating to Baa3 from reflects the reduction of risk associated with near-term maturity of short term debt, through the successful financing of a portion of a bank loan that the borough had guaranteed on behalf of a private developer in the amount of $4.5 million with a $5.1 million one-year bond anticipation note.
Also incorporated into the Baa3 rating is the borough's high debt burden and very high annual debt service of 16.6% of expenditures. It additionally factors in the borough's moderate reliance on PILOT revenues and lease payments from redevelopment projects to fund operations (12% of budget), including debt service.
Further, the rating considers Collingswood's modest remaining guaranteed debt related to redevelopment of $402,000 (2.6% of budget). The borough also maintains an adequate current fund balance of 6.5% of Current fund revenues and is comprised of a modestly-sized tax base with wealth levels that track slightly above the national median.