Junk no more: Moody's 'restores' Collingswood
Eight months after six-notch cut to junk-bond status, Mayor Jim Maley says the credit rating agency has reversed
Junk no more: Moody's 'restores' Collingswood
Joseph N. DiStefano
UPDATE: Moody's confirms it has restored one notch to Collingswood's credit ratings, bringing it back to the minimum investment grade.
EARLIER: Says Collingswood Mayor Jim Maley, eight months after Moody’s Investors Service cut his borough's credit rating a scary six notches to junk-bond status: "Moody's issued a report Thursday that restores the Borough of Collingswood’s credit rating to an investment grade rating of Baa3...
“We’re happy to have an appropriate rating again but it was a frustrating and unnecessary roadblock. "We have always been confident we’d be back at investment grade and we will continue to move forward as we have been... We’ve taken the same steps on this project as we announced last August, not one fact has changed.
"Moody’s original reasons for the downgrade are now factors in the restoration of our credit rating. There is nothing different today from eight months ago except Moody’s conclusion...
"Moody’s based the 2011 downgrade on a Borough guaranty of debt for the LumberYard Condos development. Despite pointing out numerous factual errors in Moody’s report, the rating agency maintained its downgrade of the Borough. The report’s errors included misstating the amount of the Borough’s guaranty by double and misconstruing the Borough’s home improvement program that paid $150 annually to every property owner for four years from profits of the Parkview redevelopment.
"In taking the downgrade action, Moody’s cited concern that the Borough would not be able to sell its notes; the Borough sold its notes in September 2011 and again in May 2012 even with the downgraded credit rating. Moody’s downgrade also relied on what they perceived would be the Borough’s inability to reach agreement with the project lenders; the Borough reached agreement with the project lenders on the identical terms announced in August 2011, before the Moody’s downgrade.
“We made no changes to the LumberYard project or our Borough finances to convince Moody’s of our viability. We just kept moving along as scheduled and Moody’s had to come to the realization that we are not, and never were, at any risk that would justify junk-bond status,” Maley concluded.
Looking for confirmation from Moody's.
I think Mayor Maley is being a bit disingenous with his remarks. Borrowing money for a year at over 4.5% to buy $5 million of the unsold units is not some persons idea of "no change." Interested persons should download the Borough's 2011 audited financial statements on its webpage and closely scrutinize the subsequent events section and judge for yourself. Also note, the Borough's certified financial statements do not present fairly its financial condition in accordance with generally accepted accounting standards. They are fairly represented in accordance with NJ governmental standards, whatever they are. Kind of like the so-called balanced NJ state budget?— Wilhelm Von Humboldt
