Moody’s Investors Service placed $1.4 billion of outstanding Nassau County, N.Y., debt on review for possible downgrade Wednesday after the county moved to stop an oversight board from controlling its finances.

Moody’s rates the county’s $1.4 billion of outstanding general obligation and GO-guaranteed debt A1. It downgraded the credit to A1 from Aa3 in November.

The Nassau County Interim Finance Authority last week implemented a control period on Nassau once it found that the county’s $2.6 billion 2011 budget had a deficit in excess of the 1% level that mandated a takeover.

NIFA served in an advisory role before the takeover decision.

County Executive Ed Mangano responded by seeking a permanent injunction Monday in New York State Supreme Court to block the NIFA takeover.

“The hard control and subsequent legal challenge are unprecedented in the 10 years of NIFA’s oversight and raise questions about governance process and financial control,” Moody’s analysts said in a report.

The control period allows the authority to weigh in on all borrowings, freeze wages, review contracts, and request new financing strategies. Nassau will need to file a revised financial plan with NIFA by Feb. 15.

Nassau County’s 2011 budget has a $176 million deficit under generally accepted accounting principles, authority chairman Ronald Stack said last week. Under cash accounting, the county has a $50 million deficit.

Moody’s anticipates it will resolve the review “within the next several weeks.” The rating agency will review Nassau’s liquidity position, market access for cash-flow needs, and ability to extend or replace liquidity facilities attached to Nassau Health Care Corp. variable-rate bonds.

The county guarantees the debt and the liquidity facilities expire in 2011 and 2012, according to Moody’s analyst Jessica Lamendola.

Potential termination events and mandatory collateral postings on outstanding derivatives could strain Nassau’s finances even further.

“What we will focus on now is, what resources does the county have to offset the possibility of any of those events,” Lamendola said.

Moody’s will examine $169 million of Nassau County Sewer and Storm Water Finance Authority bonds to see if the utility’s financial operations could be weakened or disrupted by the county’s fiscal challenges or the legal dispute. It will also review $14.5 million of Nassau Regional Off-Track Betting Corp. bonds that are special obligations of the county.

Fitch Ratings and Standard & Poor’s rate Nassau’s outstanding GO bonds AA-minus and A-plus, respectively, both with a stable ­outlook.

“It’s amazing that Moody’s could even consider this at a time when the county is ending the fiscal year with a balanced budget and surplus,” county senior policy adviser Brian Nevin said in a statement.

“Taxpayers should be gravely concerned that NIFA’s unfounded and unfair actions will result in a property tax hike and potential downgrade for Nassau County,” he said. “For that reason, County Executive Mangano has taken legal action.”

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