Nassau County, New York, will go to market next month armed with positive momentum on its Moody's Investors Service rating.
Moody’s revised its outlook on the Long Island county to positive from stable while affirming its A2 rating, citing three straight years of improved financial results.
It's the first Nassau County rating shift from Moody's since October 2012, when it downgraded the county to A2 and assigned the stable outlook.
“Nassau County’s budget is improving, and the future is bright,” third-year County Executive Laura Curran said. Nassau intends to sell roughly $185 million of Series 2021A general improvement bonds. The county has $1.4 billion in outstanding debt.
While Moody’s does not expect a rating change over a year or two, it said the positive outlook it assigned Thursday shows improving credit conditions and a possible upgrade during that time.
The A2 rating, Moody’s sixth-highest, reflects expectations that sales tax revenues will increase due to Nassau County's recent economic recovery, “supported by a very large tax base with strong wealth and income.” According to Moody’s, the rating also reflects expectations of a third consecutive year of improved financial results in 2021.
Moody’s also cited the “demonstrated financial benefits” from the Nassau County Interim Finance Authority oversight board and expectations of continued budget and management discipline, including the county’s establishment of a special revenue fund to hold surplus revenue and federal stimulus money.
Under the $1.9 trillion American Rescue Act that President Biden signed, Nassau County stands to receive roughly $400 million while neighboring Suffolk County stands to get about $286 million. Overall, Long Island’s county, town and municipal governments will get about $1 billion.
NIFA has controlled the finances of the large suburban New York City county since 2011.
Ongoing challenges, according to Moody’s, include a substantial debt profile, a portion of which was NIFA issued but will be paid from county sales tax revenues, and sizable financial challenges at the county's related safety-net health system. “Additionally, the rating reflects a modest reserve position and a weak cash position, both of which are expected to strengthen over the next two years,” Moody’s said.
Triple-A rated NIFA last year refinanced $473 million of county debt over 15 years and also restructured its own bonds.
“We are pushing Nassau’s financial and economic recovery to the metal and will not let up,” Curran said.
