Fitch Rates Guaranteed Nassau County Health Care, NY Bonds 'A-'

Business Wire, Sept 27, 2004

NEW YORK -- Fitch Ratings assigns an underlying long term 'A-' rating to approximately $303 million Nassau Health Care Corporation (NHCC) bonds, series 2004 (Nassau County Guaranteed). Additionally, Fitch affirms the underlying 'A-' rating to Nassau County, NY's (the county) $2.9 billion outstanding general obligation (GO) bonds. The series 2004 bonds consist of $50 million series 2004A (taxable auction rate), $34 million series 2004B (tax-exempt fixed-rate), and $219 million series 2004 C (tax-exempt variable rate) (subseries C1-C3). The series 2004 bonds will price via negotiation on or around Oct. 5 through a syndicate lead by Bear, Stearns & Co. Inc. The series 2004A bonds will have an initial auction date of Nov. 2, 2004 with an initial interest payment date of Nov. 3, 2004. The series 2004B bonds will mature serially Aug. 15, 2005-2014 with semi-annual interest payments on Feb. 15 and Aug. 15, commencing Feb. 15, 2005.

The series 2004C bonds will be issued as variable-rate obligations and swapped to fixed-rate debt through three counterparties: Bear, Stearns & Co. Inc; UBS Financial Services Inc.; and Merrill Lynch & Co. The series 2004C bonds are expected to have long- and short-term ratings assigned nearer to closing based upon the provision of a municipal bond insurance policy to be provided by FSA and a standby bond purchase agreement to be provided by Dexia Credit Local. Series 2004A and 2004B bonds will also carry a municipal bond insurance policy provided by FSA; rated 'AAA' by Fitch. The Rating Outlook is Stable.

The 'A-' rating reflects the county's long-term credit quality incorporating strong financial management practices successfully implemented over a short time period, highlighted by growing reserves; a broad and wealthy economic base; conservative budgeting aiding structural balance; and moderate debt levels with above-average amortization rates. Like other New York counties, Nassau has a high fixed cost burden, and while the issuance of the NHCC bonds and the structural management changes at NHCC should help stabilize the hospital's future position, the county retains some level of related financial exposure.

The Positive Rating Outlook reflects the likelihood that the county's GO rating will improve over the immediate term if expectations are met regarding the institutionalization of comprehensive budgeting, reporting and planning practices, and the achievement of structural balance. Furthermore, Fitch expects continued progress toward planned initiatives in the areas of labor concessions, work force reduction, assessment reform, and revenue enhancements.