MOODY'S ASSIGNS A1 TO SYRACUSE NY'S $13.2M GO BONDS AND MIG 1 TO $7.9M BANS; OUTLOOK STABLE

 Bond Anticipation Notes, Series 2016A (JSCB Purpose); Rating: MIG 1; Rating Type: Underlying ST; Sale Amount: $7,905,000; Expected Sale Date: 06/15/2016; Rating Description: Note: Bond Anticipation;

Issue: Public Improvement (Serial) Bonds, Series 2016A; Rating: A1; Rating Type: Underlying LT; Sale Amount: $13,212,840; Expected Sale Date: 06/15/2016; Rating Description: General Obligation Limited Tax;

Summary Rating Rationale

Moody's Investors Service has assigned an A1 rating to the City of Syracuse NY's $13.2 million General Obligation Public Improvement Serial Bonds Series 2016A and a MIG 1 rating to $7.9 million Bond Anticipation Notes (JSCB Purposes) Series 2016A. The outlook is stable. Concurrently we have affirmed the A1 rating on approximately $202 million of GO debt outstanding.

The A1 rating reflects the city's moderately sized stable tax base with below-average economic indicators, anchored by a strong institutional presence. The rating also incorporates the satisfactory financial position, which we expect to narrow over the near term given the city's planned use of reserves and a high but manageable debt position. The MIG 1 rating reflects strong access to the capital markets along with the city's credit characteristics.

Rating Outlook

The stable outlook reflects our expectation of continued reductions in out-year budget gaps, moderate draws on reserves, and stability in the local economy.

Factors that Could Lead to an Upgrade

Demonstration of significant progress toward structural balance

Improved liquidity as reflected in increased year-end net cash balance relative to revenues

Greater diversity in General Fund revenue sources

Factors that Could Lead to a Downgrade

Fiscal 2016 audited financial statements that show a decline in reserves beyond current expectations.

Actual out-year budget gaps significantly larger than projected

Material weakening in tax base

Legal Security

Debt service is secured by the city's general obligation, limited tax pledge.

Use of Proceeds

The 2016 A bonds will finance various city wide capital improvement projects primarily related to the city's Department of Public Works and street improvements. The 2016 A bond anticipation notes (JSCB Purposes) will renew $2 million of bond anticipation notes maturing June 24, 2016 and provide $6 million in new money financing to continue the second phase of the Joint School Construction Board (JCSB) renovation projects.