Moody's Downgrades Roosevelt Union Free School District DASNY Bonds

Moody's Investors Service downgraded the enhanced rating of the New York State Dormitory Authority's Roosevelt Union Free School District revenue bond financing program to A3 from A2.

Sunday's downgrade affects $132 million in outstanding debt.

Moody's said the downgrade is a result of its recently updated methodology in rating state aid intercept programs. State aid intercept programs enhance the safety of local bonds. The rating is no longer under review after the downgrade.

The Dormitory Authority participates in the New York State Section 99-B Intercept Program.

For strengths, Moody's associate analyst Tiphany Lee and vice president Orlie Prince noted that the future year's aid is available to be intercepted, albeit only after it is appropriated in subsequent fiscal years. They said the fact that a particular party is required to notify the state of defaults is another strength. Finally, there are satisfactory timing mechanics between default notification and revenue interception.

For weaknesses, they wrote that in times of fiscal stress the state has deferred aid to schools.

Moody's now has a stable outlook on the rating.

For reprint and licensing requests for this article, click here.
New York
MORE FROM BOND BUYER