NEW YORK - (Business Wire) Fitch Ratings assigns an 'A+' rating to approximately $72 million Dormitory Authority of the State of New York (DASNY) mental health services facilities improvement revenue bonds, series 2008G, and affirms the 'A+' rating on approximately $585 million series 2008F bonds. (Fitch originally rated the series 2008F bonds on Sept. 5, 2008, but the bonds did not come to market due to market conditions.) The bonds, which are being issued to refund outstanding insured variable-rate debt, are scheduled to be sold as early as Nov. 21 through negotiation. Fitch also affirms the underlying 'A+' rating on about $3.8 billion in outstanding mental health services facilities improvement revenue bonds. The Rating Outlook is Stable.
The 'A+' rating for the mental health bonds is based on the credit quality of the State of New York (general obligations rated 'AA-' with a Stable Outlook by Fitch). Subject to appropriation and pursuant to a financing agreement between DASNY and the department of mental hygiene, the state makes annual payments for debt service from patient care income and payments from voluntary agency facilities. The rating for the bonds further reflects the state's commitment over many decades to providing various types of mental health services, many of which are required by court mandates. Mental health bonds issued under the second resolution adopted in 2003 have a claim on moneys subordinate to that of bonds issued under the prior resolution; however, the budget includes a single appropriation for all debt and Fitch does not make a rating distinction between the liens.
In fiscal 2008, receipts from patient care income and payments from voluntary agency facilities totaled $2.9 billion, 94% of which was Medicaid reimbursements. Patient care receipts grew by almost 16% between fiscal 2004 to fiscal 2008 but are projected to rise at a slower annual pace going forward. Under a detailed flow of funds, revenues are committed first to debt service with remaining revenue flowing to the mental hygiene patient income account to support the costs of providing services. Maximum annual debt service (MADS) is about $340 million in 2010.
Fitch issued an exposure draft on July 31, 2008 proposing a recalibration of tax-supported and water/sewer revenue bond ratings which, if adopted, may result in an upward revision of this rating (see Fitch research 'Exposure Draft: Reassessment of the Municipal Ratings Framework'.) At this time, Fitch is deferring its final determination on municipal recalibration. Fitch will continue to monitor market and credit conditions, and plans to revisit the recalibration in the first quarter of 2009.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
Fitch Ratings, New York
Laura Porter, 212-908-0575
Richard Raphael, 212-908-0506
or
Media Relations:
Cindy Stoller, 212-908-0526
Email: cindy.stoller@fitchratings.com
