NEW YORK - Moody's Investors Service said it has downgraded to A3 from A1 the rating on Rockland County, N.Y.'s $240 million in rated general obligation debt and revises the outlook to negative.

Concurrently, Moody's has also downgraded to MIG2 from MIG 1 the $10.5 million bond anticipation note Series 2011C. Moody's has also confirmed the MIG 1 rating on $45 million revenue anticipation note Series 2011, $55 million tax anticipation note Series 2011.

The downgrade of the general obligation rating and negative outlook, as well as the downgrade of the BAN ratings. reflect continued operating deficits, putting growing pressure on county reserves and liquidity.

Additionally, Moody's believes that the county's 2012 adopted budget includes speculative revenue items, including $20 million in budget items that require the approval of both houses of the state legislature and the governor.

The county has also requested state approval for the issuance of between $60-$80 million in deficit reduction bonds. In addition, the county has to date failed to either sell the county-run nursing home or implement changes to improve nursing home operations to reduce or eliminate county general operating support of the home.

The confirmation of the rating on the 2011 TANs and RANs reflect the near-term time horizon for repayment of these notes (due March 8, 2012) and projected sufficient cash flow at that time.

The county also expects to issue additional TANs and RANs in the next few weeks; at this time, Moody's is not expressing an opinion on that issuance.

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