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ALMOST $36 BILLION AFFECTED BY FIRST QUARTER MUNICIPAL BOND RATING REVISIONS; CALIFORNIA AND N.Y. LOWERINGS ACCOUNT FOR OVER $30 BILLION

ALMOST $36 BILLION AFFECTED BY FIRST QUARTER MUNICIPAL BOND RATING REVISIONS; CALIFORNIA AND N.Y. LOWERINGS ACCOUNT FOR OVER $30 BILLION
 NEW YORK, April 8 /PRNewswire/ -- Moody's Investors Service announced today that the public finance department revised 92 municipal bond ratings during the first three months of 1992, affecting close to $36 billion of debt. Overall results for the quarter were negative, with 41 ratings raised and 51 lowered. The margin between the amounts of debt affected by revisions was very wide, due to the drop in credit ratings of New York State's appropriations-backed debt and California's general obligation debt. In all, just under $4 billion of debt was raised while almost $32 billion was lowered. The agency reports assigning a total of 2,092 long-term, unenhanced ratings during the quarter, making the percentage of ratings revised approximately 4.4 percent.
 General Obligation/Tax-Supported Revisions
 By far, the most significant revisions were those made to New York State and California. New York's appropriations-backed debt rating was lowered in January, to 'Baal' from 'A', affecting about $14.2 billion of debt. Reasons cited for the downgrade were primarily the state's mounting budget deficit, inability of the legislature and the administration to reach agreement on a deficit-reduction plan, and protracted weakness in the state's economy. The state's more secure general obligation rating was not revised. The State of California's general obligation rating was revised, however, to 'Aa1' from 'Aaa', in February. The downgrade affected over $16.2 billion of debt. Long- and short-term financial pressures, coupled with the magnitude of the state's infrastructure needs and other spending demands commensurate with its rapidly growing population, were key factors in the downgrade.
 Not surprisingly, general obligation (G.O.) and other tax-supported rating revisions were negative overall. Only 22 such ratings were raised, while 34 were lowered. Cities had the most favorable ratio of upgrades to downgrades, with a breakeven position of 15:15. Only one county rating was raised while eight were lowered; four school districts were upgraded and six downgraded; and one special district's rating was raised and three lowered. As discussed above, two state ratings were lowered, and none were raised. About $534 million of tax-supported debt was upgraded, compared to nearly $31.7 billion lowered. Again, the disparity is largely the result of the two state downgrades.
 Revenue-Supported Revisions
 Several significant revisions were also made to revenue-supported bonds. The Massachusetts Municipal Wholesale Electric Company's (MMWEC) rating was reinstated and raised to 'Baa1' from 'Baa' in January. That revision affected over $1.3 billion of debt. In addition, two major airports saw their ratings increase in the first quarter. The Greater Orlando (Florida) Aviation Authority's Airport revenue bonds, second lien rating was raised to 'A1' from 'A' in February, affecting $795 million of debt, and the San Francisco (California) Airports Commission's International Airport revenue first lien rating was raised to 'Aa' from 'A1', also in February. That revision affected over $272 million of debt. Finally, two major water/sewer revenue bond issues were raised in February, both in Ohio. Cleveland's Waterworks Improvement First Mortgage Revenue Bonds and Columbus' Sewer Revenue bond ratings were both raised to 'A1' from 'A'. The Cleveland upgrade affected $367 million of debt, while the Columbus revision affected $157 million.
 As has been the case in recent years, revenue bond revisions overall were more favorable than G.O. revisions, although not to the same degree as has been true in the past few years. Nineteen revenue bond ratings were raised and 17 lowered during the first quarter. The ratio of water/sewer upgrades to downgrades was very favorable, at 9:1, while health care ratings continued to suffer, with five ratings raised and 14 lowered. Two transportation issues were raised (the two airports mentioned earlier) and none lowered; one higher education rating was raised and two lowered; one housing rating was raised and none lowered; and one public power (MMWEC) rating was raised and none lowered. In all, over $3.4 billion of revenue debt was raised -- primarily reflecting the upgrade of MMWEC and the two airports -- while only $261 million of revenue-supported debt was lowered. The comparatively low amount of debt affected by revenue downgrades is due primarily to the fact that 14 of the 17 lowerings were assigned to hospitals, which generally have lower debt levels than many of their revenue-supported, tax-exempt counterparts.
 Regional Revisions
 On a regional basis, rating revisions for the first quarter differed substantially from recent years' results. Only the Far West region received more upgrades than downgrades, with six upgrades and two downgrades. Three regions received a balanced number of revisions: the Southeast had 10 each of upgrades and downgrades, the Plains region received six upgrades and six downgrades, and the Southwest region received three upgrades and three downgrades. Results for the remaining four regions are as follows: New England had two upgrades and three downgrades; the Great Lakes states received nine upgrades and 11 downgrades; The Rocky Mountain region, one upgrade and two downgrades; and the Mid-Atlantic states fared the worst, with four upgrades and 14 downgrades.
 -0- 4/8/92
 /CONTACT: Jeffrey F. Rizzo, 212-553-0354; George Leung, 212-553-0342; or William F. deSante, 212-553-0353, all of Moody's/ CO: Moody's Investors Service ST: New York IN: FIN SU: RTG


SM-AS -- NY043 -- 6244 04/08/92 12:13 EDT
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Date:Apr 8, 1992
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