Saturday, June 27, 2015

MOODY INVESTOR'S DOWNGRADE REPORT FOR HARTFORD, CT

Here is the actual Moody's report and the reason's they downgraded Hartford's financial rating

Rating Action:

Moody's downgrades Hartford, CT's GO to A3; outlook negative


Global Credit Research - 24 Jun 2015

Assigns A3 to $76M GO Bonds; city has $434M in GO debt outstanding

New York, June 24, 2015 --
Moody's Rating

Issue: General Obligation Refunding Bonds, 2015 Series A; Rating: A3; Sale Amount: $55,000,000; Expected Sale Date: 07-03-2015; Rating Description: General Obligation

Issue: Taxable General Obligation Refunding Bonds, 2015 Series B; Rating: A3; Sale Amount: $20,700,000; Expected Sale Date: 07-03-2015; Rating Description: General Obligation

Opinion

Moody's Investors Service has downgraded to A3 from A2 the rating on the City of Hartford's, (CT) outstanding general obligation bonds, affecting approximately $434 million of outstanding debt. The outlook remains negative. Concurrently, Moody's has assigned an A3 rating to the city's $76 million of General Obligation Refunding Bonds, Series 2015 A and B.

SUMMARY RATING RATIONALE

The downgrade to A3 from A2 reflects: the city's weak financial position which is evidenced by a continued reliance on one-time revenue sources in order to balance the budget; a narrow reserve position following a sizeable deficit in fiscal 2014 and modest expected improvement in fiscal 2015, limited revenue raising ability in the absence of tax increases, and diminished flexibility for future expenditure reductions. The rating also incorporates sizeable pension, OPEB and debt liabilities, as well as the city's standing as the state capital and an important regional economic center, albeit characterized by weak socioeconomic indices.

OUTLOOK

The negative outlook reflects our expectation that the city will remain challenged to restore fiscal stability over the near term, given its limited revenue raising flexibility, high fixed cost burden and continued reliance on non-recurring revenues. The outlook also incorporates the possibility for downward rating action should the city fail to adopt structurally balanced budgets and augment its slim reserve levels.

WHAT COULD MAKE THE RATING GO UP

• Established trend of structurally balanced operations
• Rebuilding of reserves to adequate levels
• Substantial tax base growth
• Significant improvement in socioeconomic indices

WHAT COULD MAKE THE RATING GO DOWN

• Protracted structural budget imbalance, including reliance on one-time revenue sources
• Reduction of General Fund reserves
• Deterioration of the city's tax base or demographic profile

OBLIGOR PROFILE

Hartford is the capital and third largest city in Connecticut, with an estimated population of 124,893.

LEGAL SECURITY

The bonds are secured by the city's general obligation unlimited tax pledge.

USE OF PROCEEDS

Both the Series A and Series B bonds will be used to restructure certain outstanding maturities from the series 2005C, 2009, 2009A, 2010A, 2011A, 2012A & B, 2013B, and 2014B & C bonds. The restructuring will result in an overall net present value loss of $9 million. On a budgetary basis, the restructuring will provide roughly $42 million in upfront cash flow savings, which will be used to provide budgetary relief in fiscal 2016 and 2017, with smaller savings from 2018 to 2020. From 2021 to 2034 the city will recognize budgetary dis-savings of approximately $52 million.

PRINCIPAL METHODOLOGY

The principal methodology used in this rating was US Local Government General Obligation Debt published in January 2014. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt 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 rating action on the support provider and in relation to each particular 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 following information supplements Disclosure 10 ("Information Relating to Conflicts of Interest as required by Paragraph (a)(1)(ii)(J) of SEC Rule 17g-7") in the regulatory disclosures made at the ratings tab on the issuer/entity page on www.moodys.com for each credit rating:

Moody's was not paid for services other than determining a credit rating in the most recently ended fiscal year by the person that paid Moody's to determine this credit rating.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.
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.
Thomas Compton
Analyst
Public Finance Group
Moody's Investors Service, Inc.
60 State Street
Suite 700
Boston, MA 02109
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

21 comments:

  1. This report does not sound like they have any confidence in Pedro Segarra or the administration of the City to turn things around , or to even know what the right thing to do is. Lets build another stadium and see just how far we can be downgraded.

    "Hartford, the Detroit of the East"

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  2. Wait a minute, Segarra just told us not too long ago how important is the city's rating. Well, Segarra, the rating is down, twice, that's how important it is to you.
    Great way to balance a budget: manipulating and deception, that's your way.

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  3. Segarra could care less, anyway he's not paying nothing, he's just getting paid and we, the people/the suckers pay for his mistakes. Segarra cares about his image only, nothing else.

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  4. Not only this is the latest news, bad news, for Hartford, but this is also the most important news, telling us that Hartford is just a short distance from being like its unwanted identical twin sister, Detroit. Pedro, how dare you run for another term.

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    Replies
    1. Where is the Courant, WFSB, NBCCT and their friends in the media to report this seriously. Looks like the Courant prefers easy reporting about Travelers Golf Champioship than this very important issue.

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    2. Hey, the Courant is useless, nobody reads it anymore.

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    3. The way they report, the way their editorials are, the Courant most likely is in Pedro's pockets. Useless and helpless journal. I have lost faith in this paper long time ago.

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  5. This is serious, very serious. If Segarra doesn't resign - he should be fired.

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  6. This afternoon 4 shot, 1 critically injurned in the Andover/Cornwall streets area.

    Segarra's reaction to reporters was that this shooting is "absolutely unacceptable." No kidding, Segarra.

    Segarra described the neighborhood as "stable." If it's that "stable" as he says, why doesn't Segarra move to that neighborhood?

    The bottom line is Segarra is clueless on anything that has to do with the city, from finance (please read the above blog) to safety (please read many earlier blogs) to anything and everything.

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  7. Segarra ' s tough act on the news was so laughable, I peed my pants. He is a punk ass, fake turn on the camera tough guy.

    Just attend a Dept. Head meeting with him when he has a toddler temper tantrum. Unfortunately I am forced to attend these bipolar meetings, of which you never know what Pedro will show up.

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  8. Moody's double DOWNgrade of Hartford financials comes together with an automatic triple UPgrade of Hartford corruption.

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  9. And anyone still wonders why Hartford still has been unable to hire a professional experienced Finance Director???

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  10. 11:05am

    I understand the one we have now is a master at storing receipts on a shelf in a shoe box

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  11. 11:05am

    I understand the one we have now is a master at storing receipts on a shelf in a shoe box

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  12. Of course there's also no comment from Cloud who convenenietly wants us to believe he only has a role when the picture is rosy and wants to take care of investor friends thru outrageous fees.

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  13. thanks for the reminder:
    whatever happened to the $600K of insurance premium payment that was lost or stolen last year?

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  14. Why is it that there is only one person that seems to comment on the true issue here: it is not the Mayor that is restructuring the bonds, its the City Treasurer. Not only is he paying outrageous fees to his friends, he is also perilously placing the city on path to bankruptcy. If you read carefully, the restructuring results in negative cash flow of $50MM+ after 2021 ....$9MM more in losses than the short-term cash flow savings. How is this accomplished: the restructure simply is delaying paying principle on a normal schedule by throwing it further out in the later years. Like all things, when that bill comes due, there is going to be a true reckoning. This is a real problem!

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  15. restructured debt costs millions more over the years - rating agencies don't like that much. Cloud takes credit when the rating stays flat, but blames the finance dept when it goes down. Just like he blamed the f.d. for the missing $680K, even though we all know who wired that money to his buddy and tenant, EJO. Lovedd his comment on cityline the other day that all he does is give the administration 'advice' and assistance. When will it end?

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    Replies
    1. WHERE IS THE MISSING $680,000? SEGARRA, PLEASE ANSWER: WHERE IS THAT MONEY?

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    2. Where is the Courant's Jon Lender? Let him investigate this $600k++ missing/stolen money

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  16. Cloud needs to be publically outed. The fees, the wife working for him ( wink wink), the missing money, pushing off payments into the future and calling it debt restructuring. No one wants to confront this loser publically. Guess that means the dems don't have the next heir apparent lined up.

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