Standard & Poor’s Ratings Services has upgraded its credit rating of the Village of Amityville.
S&P raised its long-term rating on Amityville’s outstanding general obligation debt to ‘BBB+’ from ‘BBB’ with a positive outlook.
“The higher rating reflects the village’s strong budgetary performance, supported by its positive general fund operating results over the previous three fiscal years, leading to restoration of positive, albeit still weak, reserves,” S&P wrote in its summary of the upgrade.
In 2013, S&P dropped the village’s general obligation debt rating three notches to ‘BBB-‘, which is one step above junk bond status, due to “continued deterioration of the village’s financial position and the absence of a meaningful plan to reverse the trend.” Citing reduced cash flow borrowing by the village, S&P upgraded the village to ‘BBB’ in 2014.
For the 2015 fiscal year, Amityville’s general fund balance ended in the black for the first time since 2008. The upgrade announced last week, the S&P wrote, is a result of several factors including: a very strong economy, adequate management and strong budgetary performance.
The positive outlook means there could be “one-in-three chance” that S&P will raise their outlook within a year.
“All else being equal, we could raise the rating if the village demonstrates strong budgetary surpluses in fiscal years 2016 and 2017, which results in improved reserves and liquidity commensurate with higher rated peers,” S&P wrote. “Conversely, we could lower the rating if the village were to experience a sustained or substantial weakening of budgetary performance, leading to a deterioration of reserves or liquidity.”