Dunkirk, NY GO Debt Rating Outlook Revised To Stable From Negative On Actions To Minimize Lost Revenue

Stocks and Financial Services Press Releases Wednesday March 8, 2017 09:26
NEW YORK--8 Mar--S&P Global Ratings

NEW YORK (S&P Global Ratings) March 7, 2017--S&P Global Ratings revised theoutlook on its 'A+' long-term rating and underlying rating (SPUR) on Dunkirk,N.Y.'s general obligation (GO) debt to stable from negative.

The rating action reflects S&P Global Ratings' opinion of the steps the cityhas taken to mitigate lost revenue due to NRG Energy Inc. reducing itspayments in lieu of taxes for fiscal 2017 to 15%. The city has received 80% ofthe 85% of revenue it would have lost through additional state aid. Tomitigate the remaining balance, the city cut expenses to match lost revenue.

At the same time, S&P Global Ratings assigned its 'A+' long-term rating andstable outlook to Dunkirk's $8.17 million series 2017 GO public improvementbonds and affirmed its 'A+' long-term rating and SPUR on the city's GO debt.

"We do not expect to change the rating within the two-year outlook period. Webelieve current economic factors--including the city's low market value percapita, highly concentrated tax base, and adequate debt profile--limit ourability to raise the rating," said S&P Global Ratings credit analyst LaurenFreire. "However, we could lower the rating if performance were to weaken,resulting in significantly lower reserves, or if the city cannot continue tomitigate lost revenue through additional state aid or cutting expenses."

The stable outlook reflects S&P Global Ratings' opinion that Dunkirk willlikely continue to adjust its budget to maintain structural balance while itpreserves very strong reserves.
The city's faith-and-credit pledge secures the bonds.
Officials intend to use series 2017 bond proceeds to finance existing bondanticipation notes permanently.

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