East Greenbush (Town of) NY -- Moody's affirms the Ba1 general obligation rating on the Town of East Greenbush (NY); outlook remains stable

New York, November 26, 2012 -- Moody's Investors Service has affirmed the Ba1 general obligation rating for the Town of East Greenbush (NY), affecting $2.1 million in outstanding debt; the outlook remains stable. The bonds are secured by a General Obligation pledge as limited by the Property Tax Cap -- Legislation (Chapter 97 (Part A) of the Laws of the State of New York, 2011).

RATINGS RATIONALE

The Ba1 rating reflects the town's very weak financial position after a multi-year trend of operating deficits resulted in a fiscal 2009 accumulated General Fund balance deficit of $1.7 million (-22.7% of General Fund revenues). The Ba1 rating also incorporates the town's moderately-sized tax base and above average socio-demographic profile. While the town benefits from the relatively stable capital region economy, given its location in Rensselaer County (GO rated A1), economic growth is expected to remain stable given the ongoing weak national economy. The rating also reflects the town's average direct debt burden which is expected to remain low given rapid amortization of principal (100% repaid within 10 years) and the absence of future borrowing.

The stable outlook reflects management's ongoing efforts to eliminate the town's deficit through annual budgeted deficit reduction plans and conservative budgeting on revenues and expenditures.

STRENGTHS:

*Town's proximity to the City of Albany (GO rated A1)

*Above average wealth levels

WEAKNESSES:

*Recurring operating losses resulting in a substantial deficit and lack of liquidity

*Deficit reduction plan not expected to result in positive fund balance for seven years

OUTLOOK

The stable outlook reflects the town's recently demonstrated ability to manage its deficit financial position and continue to eliminate the interfund loans to the town's water and sewer funds. The town's ability to produce financial statements in a more timely fashion will be a key component moving forward. Conservative budgeting and continued prudent fiscal management will also be key rating factors in future rating reviews.

WHAT COULD MAKE THE RATING GO UP

* Implementing the plan to stabilize operations

* Demonstrated progress toward restoring satisfactory financial flexibility

* Timely reporting of annual update documents and audited financial statements

WHAT COULD MAKE THE RATING GO DOWN

* Further deterioration of the town's reserves and negative cash position.

*Inability to access the capital markets for the issuance of BAN's resulting in a default or diminished liquidity.

The principal methodology used in this rating was General Obligation Bonds Issued by U.S. Local Governments published in October 2009. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

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Robert WeberAsst Vice President - Analyst Public Finance Group Moody'sInvestors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 Geordie Thompson VP - Senior Credit Officer Public Finance Group JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 Releasing Office: Moody's Investors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653(C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

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