Moody’s downgrades N.H. muni bank bonds

Moody’s Investors Service has downgraded the New Hampshire Municipal Bond Bank’s 2005 Resolution rating to A1, or “upper medium grade,” from Aa3, or “high grade, high quality,” affecting $259 million in outstanding debt, said the ratings agency in a release.The outlook is stable.Largely affecting the agency’s decision were new rating methodologies and the strength of underlying investments.”We have determined the credit quality of New Hampshire’s moral obligation pledge to the bond bank program to be higher than the pool program rating evaluated under the U.S. Municipal Pool Program Debt methodology,” said the agency. “Our assessment of the moral obligation rating for the bond bank program is three notches below the state’s general obligation bond rating of Aa1 with a stable outlook.”Also driving the decision is the “relative weakness” of several underlying sureties.”All three of the surety providers have experienced downward rating revisions due to their declining credit quality,” said the agency.Moody’s said it also factored in the bond bank’s “long and successful operating history of the bond,” and active oversight of loan repayments, credit quality and timely repayments of debts.”Additional security is provided by the bank’s available funds, currently totaling $5.5 million, which could be used for debt service in the event of non-payment by an issuer. … The weakened credit quality of the sureties reflects lower confidence that funds will be available to fund the reserve should they be needed in the future,” said the agency.The rating action concludes a review started on Oct. 27 using the agency’s new rating methods for pool program debt.- CINDY KIBBE/NEW HAMPSHIRE BUSINESS REVIEW