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Hempstead (Town of) NY -- Moody's assigns Aa1 to Hempstead, NY's GO Bonds; outlook stable

·13 min read

Rating Action: Moody's assigns Aa1 to Hempstead, NY's GO Bonds; outlook stable

Global Credit Research - 25 Jan 2021

New York, January 25, 2021 -- Moody's Investors Service has assigned a Aa1 rating to the Town of Hempstead, NY's $22.3 million Public Improvement Refunding Serial Bonds - 2021. Moody's maintains the Aa1 issuer rating and general obligation limited tax (GOLT) rating on outstanding parity debt. The issuer rating is the same as the general obligation unlimited tax rating and there is no debt associated with this rating. The outlook is stable.

RATINGS RATIONALE

The Aa1 reflects a significantly improved financial position driven by conservative budgeting over the past five years. The financial position has further benefited from federal funding during the pandemic. The rating also factors in a significant tax base with a strong socio-economic profile and manageable debt burden.

We consider the outstanding debt to be GOLT because of limitations under New York State law on property tax levy increases. The lack of distinction between the Aa1 GOLT rating and the Aa1 issuer rating reflects the town's ability to override the property tax cap and the faith and credit pledge in support of debt service.

RATING OUTLOOK

The stable outlook reflects the expectation that reserves and liquidity will remain ample in the next two years despite the planned use of reserves. The outlook further incorporates the expectation of significant debt needs, particularly for the water districts.

FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATING

- Maintenance of reserves consistent with Aaa peers

- Managing future debt needs

FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATING

- Declines in reserves in excess of what is planned

- Material growth in debt burden

LEGAL SECURITY

The GO bonds are payable from the town's general obligation pledge as limited by New York State's Property Tax Cap-Legislation (Chapter 97 (Part A) of the Laws of the State of New York, 2011).

USE OF PROCEEDS

The bonds will refund the Series 2012 with no extension of maturity and for expected net present value savings.

PROFILE

The town is situated in the southwest and south central portions of Nassau County (A2 stable), and covers 127 square miles representing approximately 41% of Nassau County's total land area. The town's boundaries are formed by The City of New York (Aa2 negative) to the west, the Town of North Hempstead (Aaa stable) to the north, the Town of Oyster Bay (Baa1 postive) to the east, and the City of Long Beach (Baa2 negative) and the Atlantic Ocean to the south. The town is the most populous town in the State, with a population of 768,057 as of 2018, according to the U.S. Census Bureau. The town accounts for approximately 57% of the total population of the county. There are 22 incorporated villages in the town and 33 unincorporated areas.

METHODOLOGY

The principal methodology used in this rating was US Local Government General Obligation Debt published in July 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBM_1230443. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.

For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

The rating has been disclosed to the rated entity or its designated agent (s) and issued with no amendment resulting from that disclosure.

This rating is solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1243406.

The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the EU and is endorsed by Moody's Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.

The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the UK and is endorsed by Moody's Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK. Further information on the UK endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Robert Weber Lead Analyst Regional PFG Northeast Moody's Investors Service, Inc. 7 World Trade Center 250 Greenwich Street New York 10007 US JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Genevieve Nolan Additional Contact State Ratings JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Releasing Office: Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653

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