Standard & Poor's Ratings Services said it revised its outlook to negative from stable and affirmed its A-plus long-term rating on Nassau County, N.Y.'s general obligation bonds and its A rating assigned to the Nassau Regional Off-Track Betting Corp.'s 2005 revenue.
It also assigned an A-plus rating and negative outlook to the county's series 2016A refunding GO bonds and 2016B GO bonds. Further, it assigned an SP-1-plus short-term rating to the county's series 2016A taxable bond anticipation notes (BANs).
"The outlook change is based on the county's further compromised budgetary flexibility and continued very weak adjusted budgetary performance despite significant efforts to increase recurring revenues while limiting expenditure growth," said Standard & Poor's credit analyst Ruth Ducret.
The county's faith and credit GO pledge secures the GO bonds and BANs, including the statutory authorization to levy ad valorem taxes on all real property within the county, subject to the provisions of the 2011 tax levy limitation law, which imposes additional procedural requirements on the ability of municipalities to increase the real property tax levy each year.
The A rating on Nassau Regional Off-Track Betting Corp.'s series 2005 revenue bonds is based on Nassau County's unconditional and irrevocable obligation under the support agreement, which is subject to appropriation to make annual debt service payments on behalf of the corporation directly to the trustee, the agency said. Due to the limited nature of the county obligation, which does not include a faith and credit GO pledge, nor the authority for the levy of an unlimited ad valorem tax, the series 2005 bonds have been rated one notch below the A-plus rating on the county's GO debt.
The SP-1-plus rating reflects the rater's assessment of the county's low market-risk profile, indicating its view that there is a low likelihood that the market liquidity of the obligor's debt would be weaker than that suggested by the A-plus long-term rating.
Officials plan to use bond proceeds from the 2016A bond series to refund the county's 2008A, 2008C, 2009A, and 2009C bonds for present value savings. There is no extension of maturity and savings are taken largely in the first four years of the maturity schedule.
Proceeds from the 2016B series will be used for various capital improvements and equipment purchases. Finally, BAN proceeds will be used for capital improvements to the county's sewer system.
The county plans to issue the BANs as taxable obligations based on its consideration of a potential public-private partnership for the sewer system.
