UPDATE 1-Moody's sees some NJ, NY credit ratings affected by Sandy

Tue Nov 13, 2012 8:48pm EST

Related Topics

NEW YORK Nov 13 (Reuters) - Moody's Investors Service said on Tuesday that several municipal issuers in New York and New Jersey have been so heavily impacted by Superstorm Sandy that their credit ratings could be affected.

The Wall Street rating agency said that those included Nassau County, rated A2, and Long Beach City, rated Baa3, both in New York.

Also potentially affected in New Jersey are Atlantic City, rated Baa1, the Borough of Seaside Heights, rated A2, Woodbridge Township, rated Aa2, and Brick Township, rated Aa2.

Four municipalities - New York's Long Beach City School District, and New Jersey's Hackensack School District, Jersey City and Ship Bottom - were late on their debt service payments during the storm, mostly because of power outages and logistical hurdles, Moody's said.

All the payments have since been made, but Moody's is still investigating whether the delays "underscore management weakness and could potentially recur."

"The damage from Hurricane Sandy will pressure affected issuers' budgets and expose the most heavily impacted entities to a number of operational and budgetary risks that could take a year or longer to play out," Moody's said.

Overall, the credit rating agency expects credit quality to remain unchanged for most municipalities, with a just a "handful" of possible rating actions related to the storm.

One critical issue is the ability of a local government to withstand a temporary reduction in reserves to cover recovery costs before federal reimbursement arrives.

Moody's considers both the level of reserves and "the quality of management" critical to its methodology for examining state and local governments, it said.

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.