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MOODY'S REVISES BRIDGEPORT GENERAL OBLIGATION BOND RATING TO Ba FROM B RAISES; SPECIAL CAPITAL RESERVE FUND BOND RATING TO A FROM Ba

MOODY'S REVISES BRIDGEPORT GENERAL OBLIGATION BOND RATING TO Ba FROM B
 RAISES; SPECIAL CAPITAL RESERVE FUND BOND RATING TO A FROM Ba
 NEW YORK, Aug. 19 /PRNewswire/ -- The City of Bridgeport is now returning to the capital market with its first bond issue since its much publicized bankruptcy filing in June 1991. The city's new mayor who took office in November 1991, in cooperation with state officials and the city council, withdraw all bankruptcy-related filings and has indicated that he does not consider bankruptcy to be a viable option for the city. With the immediate threat of bankruptcy removed, several of Moody's concerns relating to the implications of the bankruptcy filing on bondholder protection have been alleviated.
 With the withdrawal of the city's bankruptcy petition, uncertainties that existed over how the federal bankruptcy court would consider the integrity of the Special Capital Reserve Fund (SCRF) provisions under the 1989 indenture which provides security enhancement on SCRF bonds has been removed. The action by the city also remedies an event of default under the 1989 indenture. These actions result in the rating revision on SCRF bonds from Ba to A, once again recognizing the State of Connecticut's obligation to restore deficiencies in this trustee-held reserve fund from annually appropriated state funds. In the absence of bankruptcy concerns, Moody's views this protection as a credit enhancement to the city's general obligation security allowing for a distinction in the credit enhancement to the city's general obligation security allowing for a distinction in the credit standing of these SCRF bonds from other indebtedness tied to the city's continued financial stringency.
 The $6.9 million bonds currently offered are general obligations of the city issued pursuant to Special Act 88-80 and the 1989 indenture and are additionally secured by the Special Capital Reserve Fund which is funded in an amount equal to maximum annual debt service. The current refunding issue and the sale of city parklands to the State of Connecticut are critical components of a debt restructuring plan incorporated in the city's fiscal 1993 budget. The refunding issue is being undertaken to provide budget relief and the asset sale proceeds will be used to redeem Special Capital Reserve Fund (SCRF) bonds providing an economic benefit and additional SCRF capacity so as to enable the refunding issue. The act and the 1989 indenture limit the amount of outstanding bonds to be secured by the SCRF to $35.0 million and require asset sales be used in the first instance to redeem 1989 Series B term bonds due March 1, 2005.
 The withdrawal of the bankruptcy filing also has positive implications for the city's general obligation rating which was lowered from Baa to B in June 1991. With the cloud of bankruptcy now lifted, we are revising this rating to Ba. This rating recognizes the new administration's demonstrated willingness to use conventional means to achieve balanced operations, improved cooperation between the state review board and this administration, and the protection afforded bondholders by the property tax intercept provisions of the act.
 With the spectre of bankruptcy removed, the city's credit standing rests with its basic credit fundamentals characterized by chronic budget problems which stem from its underlying economic difficulties. The city continues to face significant challenges in its need to balance financial operations with available resources. Unsettled relations with labor unions, and the highly politicized nature of potential tax rate increases remain. These issues have long characterized the City of Bridgeport. The two year mayoral term and potential lack of administrative continuity present particular challenges to the city as it confronts its broad demands. Bridgeport continues to be the largest municipality within the state; further improvement in credit standing will require sustained resolve from city administrations in addressing its perceived credit shortfalls.
 -0- 8/19/92
 /CONTACT: Dan Heimowitz, 212-553-0340, or Joan Dougherty, 212-553-7737, of Moody's Public Finance Department/ CO: ST: Connecticut IN: SU: RTG


SM-KW -- NY069 -- 1514 08/19/92 17:55 EDT
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Date:Aug 19, 1992
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