Nassau County, New York, eyes NIFA refinancing deal

Register now

Nassau County's longtime fiscal control board is preparing to sell a possible debt restructuring.

While County Executive Laura Curran would decide whether to embark on the refinancing, the Nassau Interim Finance Authority has tapped Goldman Sachs as senior manager for a potential deal. After Curran requests the sale, it would require approval of the Republican-controlled county legislature before it can proceed. NIFA currently has $411 million of outstanding debt slated to be paid off in 2025.

Nassau County Executive Laura Curran is considering a debt refinancing through the county's fiscal control board.

Chris Boyle, a spokesman for Nassau County Legislative Presiding Officer Richard Nicolello, R-New Hyde Park, said the legislature has not received a borrowing proposal from the Curran administration and, therefore, it is too soon to determine if it would gain support. The sale would be an attempt to offset the financial hit caused by the COVID-19 pandemic.

"We can't comment until we see what the county executive proposes," Boyle said.

Curran spokeswoman Christine Geed said there is no timetable for deciding whether to pursue the refinancing or a planned amount.

If the borrowing comes to fruition, it would extend NIFA’s oversight authority to when the bonds are repaid.

“This would keep NIFA’s oversight in place for however long they issue the debt for,” said S&P Global Ratings credit analyst Nora Wittstruck. “We think the longer NIFA stays and the longer it can be around the better it will be for the county.”

The county faces an estimated $384 million deficit for its current 2020 budget cycle driven largely by steep revenue losses since the virus’ outbreak in March.

NIFA provides the county with a chance for lower-cost borrowing with its triple-A ratings. The county’s debt, by comparison, is rated A-plus by S&P, A2 by Moody’s Investors Service and A by Fitch Ratings.

S&P's Wittstruck said debt savings would help Nassau absorb revenue hits suffered when businesses were forced to close. She said the county’s heavy reliance on sales tax revenues to balance its budget has made it especially vulnerable during the virus, but noted, better-than-expected collections prior to COVID-19 would offset some of those losses.

"NIFA's selection of underwriters is another important step on the path to sustained economic recovery and will help the county regain financial losses in the wake of the COVID-19 pandemic," Michael Fricchione, a spokesman for County Executive Laura Curran, said in a statement.

NIFA last sold bonds for Nassau in 2015 with a $116.3 million of sales tax-secured refunding bonds. Goldman Sachs was co-manager on the 2015 deal and has underwritten prior NIFA transactions in the role of senior manager.

“NIFA's decision to select Goldman Sachs is one of many important steps we've taken over the last several weeks as we prepare to assist Nassau County in their financial recovery,” NIFA chairman Adam Barsky said in a statement. “Goldman's familiarity with NIFA, the county and their overall expertise made them the best choice to lead the group of firms we've selected to assist in any effort to refinance or restructure NIFA or county debt.”

Curran, who was elected in 2017, made exiting NIFA’s control period a primary goal for her first term, after inheriting a negative $68.8 million rainy day fund and $122 million budget deficit from the prior administration. NIFA cited the county’s “incremental progress” toward achieving structural balance late last year when approving a $3.11 billion 2020 budget, despite projecting a $47.8 million deficit.

Clarification: The original headline and story was unclear about the implications of a new bond deal for the length and type of NIFA oversight. Those references were removed.

For reprint and licensing requests for this article, click here.