Moody's Upgrades Glen Cove's Financial Outlook to Stable

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New York, November 04, 2013 -- Moody's Investors Service has affirmed the Baa3 rating and revised the outlook to stable from negative on the City of Glen Cove's (NY) $40 million general obligation debt outstanding. The city's debt is secured by a general obligation pledge as limited by the Property Tax Cap - Legislation (Chapter 97 (Part A) of the Laws of the State of New York, 2011).

SUMMARY RATINGS RATIONALE

The Baa3 rating reflects the city's distressed financial position, as demonstrated by a sustained negative fund equity position for the last nine years (2002 through 2012), despite the issuance of deficit reduction bonds in 2007 and management's efforts to restore balanced operations. The rating also incorporates an economic base that includes above average income and wealth levels and a debt burden that, while moderate relative to the city's tax base, comprises a significant portion of the city's budget and is exposed market fluctuations on a number of short-term note issuances.

The revision of the outlook to stable reflects stabilizing financial operations over the past two years. Additionally, management projects surplus operations in fiscal 2013 and budgeting practices continue to improve following the adoption of the 2014 budget.

Strengths:

- Diverse tax base with above average wealth levels

- Improved budgeting practices help stabilize financial operations

Challenges

- Large deficits across all funds of the city

- Annual tax certioraris resulting in increased debt issuance

Outlook

Moody's stable outlook reflects our expectation that the city will continue to rebuild financial reserves given improved budget practices. The outlook also reflects the additional state oversight required when the city issued deficit reduction bonds in 2007. The state comptroller's office reviews the city's budget and makes recommendations and requires the city to report on a quarterly basis. Future rating reviews will factor management's ability to continue to grow reserves and restoring structurally balanced operations.

What Could make the Rating Go Up:

- Demonstrated material progress toward reducing the accumulated deficit

- Continuation of improved budgeting practices

- Successful implementation of a plan to rebuild reserves and restore structurally balanced operations

What Could make the Rating Go Down:

- Failure to make material progress toward reducing the accumulated deficit

- Underperformance relative to budget in fiscal 2013 and 2014

The principal methodology used in this rating was General Obligation Bonds Issued by US Local Governments published in April 2013. 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.

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.