October 15, 2002                                                        

MOODY’S ASSIGNS LIBRARY FINANCING ITS HIGHEST RATING

RAHWAY – Moody’s Investors Service has assigned one of its highest ratings to the city’s recently-issued bonds for the construction of its new public library and its highest possible rating for the issuance of notes for the library construction, reflecting the city’s fiscally sound finances.  The service also praised the city’s recent privatization of the management of its water utility.

In a report released this week, Moody’s issued an underlying A1 rating, with a stable outlook, to the $4.42 million in Rahway Redevelopment Agency, New Jersey Public Library Bonds, Series 2002, and a MIG 1 rating (the highest possible rating for notes) to the $5.78 million Public Library Project Notes, Series 2002.  The bonds are expected to carry the insurer’s financial strength rating of Aaa.  The city’s underlying high rating of A1 will continue to be maintained by investors.

According to Moody’s, “the rating for both the notes and bonds reflect the strength of the security for debt service payments.  The debt is rated base largely on the relative credit quality of the City of Rahway which is characterized by a growing tax base, satisfactory financial operations and a manageable level of debt.”

Moody’s also affirmed the city’s excellent A1 rating on $27.2 million in outstanding general obligation bonds.

 “Assignment of our highest quality note rating also reflects the city’s demonstrated market access as they received five bids for their most recent bond sale,” said the report.

The financial rating service praised the city’s recent redevelopment efforts, stating “Rahway’s tax base will continue to enjoy moderate growth given the city’s downtown redevelopment program and resulting commercial and residential developments.  The city’s tax base has experienced growth since 1998.  Recent building trends have been positive, with Merck adding a reported $70 million in ratables within the past several years.”

Finally, Moody’s identified the city’s move to privatize the management of its municipal water utility as a “dependable revenue source, providing almost $2 million in current fund revenue” and praised the city for its “satisfactory financial operations.”

“This third-party analysis of the city finances shows that we are managing our capital projects like the new library and our new parks and playgrounds in a fiscally conservative and responsible manner,” said Kennedy.  “The fact is, the vast majority of the library’s estimated cost of $12 million for the entire project will not be borne by property taxpayers, but by federal and state grants and the sale of two floors to the private sector.  Most likely, the top two floors will be used as doctor’s offices.  We wanted to do this project right, with a minimal impact on our taxpayers and give our residents a library that they could be proud of.  This is sensible, sensitive planning at its finest.”

Moody’s Investors Service, a leading global credit rating, research and risk analysis firm, publishes credit opinions, research, and ratings on fixed-income securities, issuers of securities and other credit obligations.