The Town of Hempstead, N.Y. on Long Island had its credit rating for $370 million of previously issued limited tax general obligation bonds slashed one notch by Moody's Investors Service to Aa2. The outlook was revised to negative from stable.
"The downgrade reflects three years of structurally imbalanced operations, which have led to deterioration in available fund balance," said Moody's analyst Geordie Thompson in his Dec. 3 report. "The negative outlook reflects the expectation of additional declines in the town's reserve and liquidity positions across all operating funds in fiscal 2016."
Thompson added that the Aa2 rating also takes into account Hempstead's "large and diversified tax base," high income levels, and "manageable" debt positioning. He said the bonds' rating could go up if reserves are replenished with more "structurally balanced operations" including full pension contribution payments.
"Our town's credit ratings remain at solid investment grade, recognizing Hempstead's strong financial position," said Town of Hempstead spokesman Mike Deery in a statement. "We will continue to aggressively control costs within our discretion while delivering high-quality services to residents."
Moody's also assigned an Aa2 rating to the Town of Hempstead's $67.1 million Public Improvement Serial Bonds, 2015 scheduled for Dec. 8 to fund highway improvements and park upgrades. Great Neck, N.Y,-based Capital Markets Advisors is the financial advisor on the transaction with Winston & Strawn working as bond counsel.
Hempstead is the largest township in the country with a population of 766,697. The Nassau County town encompasses 22 villages and 37 hamlets.
