Moody's Says No to Re-Rating Borough

The Collingswood issued to Moody’s Investor’s Service—to refute a 6-point drop in Collingswood’s credit rating issued in —failed to persuade.

On Monday, the investor’s service issued a follow-up report and detailed their decision not to re-rate the borough, despite Collingswood’s claims.

“Moody’s Investors Service has maintained Collingswood Borough’s Ba1 GO rating and its status as under review for possible downgrade,” Moody’s said. “The action affects approximately $28 million in outstanding rated debt, secured by the borough’s general obligation unlimited tax pledge. The rating was downgraded to Ba1 from A1, and placed under review for possible downgrade on September 12, 2011.”

Borough debt, cited Moody’s, was generated from a May 2006 loan, which was to be repaid by condominium developer Lumber Yard Redevelopment, LLC.

“The borough may continue to be challenged to meet guaranteed debt obligations related to a redevelopment project, despite several notable events that have occurred since our review began in ,” said Moody’s. “We continue to monitor the borough’s ongoing efforts to meet its near-term obligation as guarantor on $4.5 million of a redevelopment loan of $8.5 million.

Moody’s did make note that the $4.5 million guarantee served as a correction to its original September report, which listed the amount as $8.5 million.
While Collingswood Mayor James Maley did not return calls for comment, he issued a borough press release addressing the issue. The release acknowledged Moody’s re-rating denial.

“Moody’s maintains Collingswood’s Ba1 status. We are strongly opposed to this status, as the borough has accomplished each financial goal Moody’s claimed it would not,” said Maley, via the release. “We have restructured the LumberYard project to weather the world economic issues, while bringing new vibrancy to our downtown and never jeopardizing our community.

“No matter what hoops we jump through, Moody’s will maintain their original decision, to avoid admitting they are wrong,” he said. “The real story here is the lack of professionalism from what is supposed to be a major credit agency. We don’t fit the ‘junk’ matrix, we’ve achieved all their earmarks and yet they continue to smear the borough with no repercussions. We’re confident Collingswood’s ordeal will shine a light on the mismanagement of these agencies.”

In the release, Maley cited that Moody’s has “changed the rules” in order to “justify their incorrect results.”

A copy of Moody's report, which details their decision not to re-rate the borough, has been included as a .PDF file in the photo gallery attached to this story. A copy of the mayor's press release can also be found there.