NEW YORK - Following a downgrade from Fitch Ratings, Standard & Poor’s has followed suit, dropping Suffolk County, N.Y.’s general obligation bonds two notches to A-plus from AA.
The downgrade is based on the county’s negative financial position, widening structural deficit, and limited action to date on structural solutions to address the deficit, S&P said.
The GO bonds have been removed from credit watch with negative implications, where they had been placed since March, and assigned a stable outlook.
“The stable outlook reflects our view that at the current rating level, we expect the country to implement formal deficit mitigation plan measures over the two-year outlook horizon and progress toward stabilizing its financial and liquidity positions,” said S&P analyst Lindsay Wilhelm.
Wilhem added that if the county fails to make progress in implementing the plan, the rating could be pressured. But if there is progress in stabilizing the financial position and liquidity, credit quality could improve.
Fitch on Wednesday downgraded the GOs to A-plus from AA-minus and Moody’s Investors Service maintained its A1 rating on the bonds. Both ratings agencies assign negative outlooks.
The county on Long Island has been in a state of fiscal emergency since March and faces a $530 million budget deficit.
The county plans to auction $60 million of public improvement serial bonds on June 6, with the proceeds to be used for capital projects.
