February 19, 2013 / 10:18 PM / 5 years ago

TEXT-Fitch affirms Nassau County, N.Y. GOs at 'A+', BANs at 'F1'

Feb 19 - Fitch Ratings takes the following rating action on Nassau County,
New York (the county):

--$163.3 million general improvement bonds, 2013 series A affirmed at 'A+';
--187.8 million bond anticipation notes (BANs), 2013 series A affirmed at 'F1'.

The Rating Outlook is Negative.

The bonds (via competition) and notes (via negotiation) are scheduled to price
on Feb. 21. Fitch's affirmation today follows the original rating assignment on
Feb. 11, 2013 and a subsequent adverse court opinion issued on Feb. 14, 2013.

The U.S. District Court for the Eastern District of New York issued, on Feb. 14,
2013, an opinion granting the plaintiffs' (law enforcement unions) summary
judgment seeking to nullify the Nassau County Interim Finance Authority's (NIFA)
imposition of a wage freeze in 2011. The judge stayed his decision pending
appeal. NIFA announced that it will appeal to the United States Court of Appeals
for the Second Circuit.

Fitch expects that NIFA will continue as planned and extend the wage freeze set
to expire in late March. The county believes that fiscal 2013 cash flow should
not be affected, which Fitch views as reasonable given the likelihood that the
appeal process could extend into next year. However, the projected budget gap of
$61.9 million for 2014 would substantially increase if NIFA loses its appeal and
is required to repay approximately $80 million of wage savings achieved through
2012 as well as budget savings that continues to accrue.

An adverse decision on appeal would further stress the county's already limited
financial flexibility and would likely result in a downgrade. While the county
would likely issue judgment bonds to cover retroactive pay, Fitch believes the
county's options for meaningful revenue and expenditure adjustments to manage a
larger resultant pro forma budget gap, are limited; reflected in the Negative

For more information on bond and notes security as well as key rating drivers
and rating sensitivity, see Fitch's Feb. 11, 2013 rating action commentary
titled 'Fitch Rates Nassau County, NY's GOs 'A+' & BANs 'F1'; Outlook Negative'
available at www.fitchratings.com.

At this time, Fitch also affirms the following ratings:

--$1.4 billion in outstanding general obligation (GO) bonds at 'A+';
--$259 million in outstanding Nassau Health Care Corporation (NCHCC) county
guaranteed bonds at 'A+';
--$13.1 million in outstanding Nassau Regional Off-Track Betting Corporation
(NROTBC) revenue bonds series 2005 at 'A';
--$480 million in outstanding notes at 'F1'.

The Rating Outlook for all long-term debt is Negative.

Additional information is available at 'www.fitchratings.com'. The ratings above
were solicited by, or on behalf of, the issuer, and therefore, Fitch has been
compensated for the provision of the ratings.

Applicable Criteria and Related Research:
--'Tax-Supported Rating Criteria' (Aug. 14, 2012);
--'U.S. Local Government Tax-Supported Rating Criteria' (Aug. 14, 2012).

Applicable Criteria and Related Research:
Tax-Supported Rating Criteria
U.S. Local Government Tax-Supported Rating Criteria

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