After receiving confirmation of its Baa3 rating, Long Beach, N.Y., plans to issue $5 million of cash-flow notes late next week.
Roosevelt & Cross Inc. will price the notes, which will mature in March 2013, said the city’s director of communications, Gordon Tepper. Orrick, Herrington & Sutcliffe LLP will be bond counsel.
The note offering follows a confirmation from Moody’s Investors Service of the city’s Baa3 rating, and the announcement that the rating is no longer under review for downgrade.
The outlook has been revised to negative. The rating had been under review for possible downgrade since December 2011 when Moody’s downgraded Long Beach to Baa3 from A1.
“I’m extremely happy to hear that we are no longer living under the constant threat of being downgraded to junk-bond status,” said City Council President Fran Adelson.
Moody’s said the rating and outlook reflect the city’s projected deficit fund balance in fiscal 2012 and a cash position that has significantly declined over the past two years.
The city’s general fund has shrunk to an estimated negative $7.4 million at the end of fiscal 2012, from a high of $8 million in fiscal 2008.
The report noted that the management has “reportedly stabilized the city’s financial position,” but Moody’s expects it to remain challenged as officials implement deficit reduction plans.
“In less than six months, we’ve stopped the bleeding, cut spending, cut overtime, shrank the workforce, passed a budget that eliminates the city’s annual operating deficit — and now Moody’s has confirmed that we are on the road to recovery,” said Long Beach’s city manager Jack Schnirman.
Moody’s said the negative outlook could be removed if the city demonstrates an ability to manage near-term cash shortfalls, access the capital markets, and further implement newly budgeted cost controls and revenue enhancements.
