New York State Dormitory Authority#s 2012G Revenue Refunding Bonds Downgraded To #AA-# From #AA+#

Stocks and Financial Services Press Releases Tuesday January 23, 2018 09:25
NEW YORK--23 Jan--S&P Global Ratings

NEW YORK (S&P Global Ratings) Jan. 22, 2018--S&P Global Ratings has lowered its long-term rating two notches to 'AA-' from 'AA+' on New York State Dormitory Authority's (DASNY) series 2012G school districts revenue bond financing program revenue refunding bonds. The outlook is negative.

The downgrade reflects the deteriorated credit quality of one member district--Eastport South Manor Union Central School District (CSD). "The CSD has continually used draws on reserves to balance its budget," said S&P Global Ratings credit analyst Tiffany Tribbitt.

DASNY issued the 2012G bonds on behalf of Eastport-South Manor CSD (AA-/Negative) and Longwood CSD (AA+/Stable).
The rating reflects our view of:
  • The participating districts' credit characteristics; and
  • The statutory provisions provided by section 99-b of New York State Finance Law and more than 1x maximum annual debt service coverage by state aid.

All bonds represent a faith-and-credit general obligation pledge of the participant school districts. No district is responsible for another district's payments. In evaluating the rating, we are first applying our multiple revenue streams criteria. In our view, when different obligors pledge their revenues on a several basis and each revenue stream is necessary to pay debt service, the rating reflects our assessment of the credit quality of the pledged revenue stream with the weakest credit quality.

Eastport-South Manor CSD, with an approximate population of 20,034, is on the south shore of Long Island. IOs financial position has weakened over recent years. The district spent its total reserves down to $5.2 million in fiscal 2017 from $20.6 million in fiscal 2012. It closed fiscal 2017 with a $1.1 million use of reserves-when the district's plan was to eliminate its reliance on reserves. The total fund balance of $5.2 million is we consider an adequate 5.7% of operating expenditures. The total available fund balance was $3.0 million, or 3.4%, which we consider weak.

The negative outlook reflects our opinion of Eastport-South Manor's credit quality. The negative outlook on the CSD reflects our view that that the district's credit quality could further deteriorate. We believe a positive rating action during our one-year outlook period is limited, given the CSD's credit quality. Given our weak-link approach to this rating, if the district's credit quality were to continue to deteriorate, we could lower this rating.

Certain terms used in this report, particularly certain adjectives used to express our view on rating relevant factors, have specific meanings ascribed to them in our criteria, and should therefore be read in conjunction with such criteria. Please see Ratings Criteria at www.standardandpoors.com for further information. Complete ratings information is available to subscribers of RatingsDirect at www.capitaliq.com. All ratings affected by this rating action can be found on the S&P Global Ratings' public website at www.standardandpoors.com. Use the Ratings search box located in the left column.


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