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MOODY'S CONFIRMS 'Baa1' RATING ON NEW YORK CITY'S GENERAL OBLIGATION BONDS AND ASSIGNS RATINGS TO FOUR SERIES OF ADJUSTABLE RATE BONDS

MOODY'S CONFIRMS 'Baa1' RATING ON NEW YORK CITY'S GENERAL OBLIGATION

BONDS AND ASSIGNS RATINGS TO FOUR SERIES OF ADJUSTABLE RATE BONDS
 NEW YORK, Dec. 18 /PRNewswire/ -- Moody's Investors Service has confirmed the "Baa1" rating on the City of New York's general obligation bonds in conjunction with today's planned sale of $782 million Fixed Rate General Obligation Bonds, Fiscal 1992, Subseries C-1. At the same time, Moody's has also assigned ratings to $203 million Adjustable Rate General Obligation bonds also scheduled for sale today. These ratings are "Aaa/VMIG 1" for Subseries C-2 (SBPA: Morgan Guaranty Trust Company of New York), "Aa3/VMIG 1" for Subseries C-3 (SBPA: The Industrial Bank of Japan, Ltd.), "Aa2/VMIG 1" for Subseries C-4 (SBPA: The Fuji Bank, Ltd.), and "Aa3/VMIG 1" for Subseries C-5 (SBPA: The Sumitomo Bank, Ltd.).
 In confirming the rating on the city's general obligation bonds, Moody's noted that, "The city's fiscal situation continues to be dominated by both near and long-term fiscal pressures. Although new budget gaps in the current year are possible, their magnitude should remain manageable given the seemingly reasonable near-term economic assumptions underlying the budget and city officials' demonstrated willingness to maintain balanced operations. Long-term uncertainties are significantly greater as a result of the possibility of a slower than anticipated economic recovery, the state's continuing financial problems, and the need for cooperation from the state and others to carry out the city's out-year gap-closing plans. Future credit quality depends upon the city's ability in its upcoming financial plan modification, to identify a course of action which will establish an economically sustainable fiscal balance."
 The sale of adjustable rate bonds will be the city's first under authorizing legislation passed by the state in July. The ratings on the adjustable rate bonds reflect the presence of four standby bond purchase agreements, one for each subseries, which provide for the payment of purchase price on the bonds. The standby bond purchase agreements function in much the same way as standby letters of credit. If there are insufficient funds on any date for payment of principal or interest on any subseries of variable rate bonds there will be a mandatory tender of all the bonds of that subseries to the bank providing the standby bond purchase agreement securing that subseries. Similarly, if there is a failed remarketing of the tendered bonds of a subseries, there is a mandatory tender to the bank providing the standby bond purchase agreement for that subseries to pay the difference between the remarketing proceeds and the aggregate purchase price of those tendered bonds. There are termination events under each standby bond purchase agreement by which the banks may choose to terminate their obligation to purchase tendered bonds, however there must be a mandatory tender, which the bank is obligated to honor, prior to the termination of the agreement. The ratings for each adjustable rate subseries are based on Moody's evaluation of the creditworthiness of the bank issuing the standby bond purchase agreement.
 -0- 12/18/91
 /CONTACT: Kenneth B. Kurtz, 212-553-0834, William F. deSante, 212-553-0353, or Mary Beth Usry, 212-553-4808, all of Moody's/ CO: City of New York ST: New York IN: SU: RTG FC-OS -- NY062 -- 3547 12/18/91 16:05 EST
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Publication:PR Newswire
Date:Dec 18, 1991
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