MOODY'S ASSIGNS Aa3 RATING TO TOWNSHIP OF OLD BRIDGE'S (NJ) $5.675 MILLION GENERAL OBLIGATION BONDS

General Obligation Bonds Aa3
Sale Amount $5,675,000
Expected Sale Date 12/03/03
Rating Description General Obligation Bonds

Moody's Outlook - No Outlook

NEW YORK, November 26, 2003 -- Moody's Investors Service has assigned a Aa3 rating to the Township of Old Bridge's (NJ) $5.64 million General Obligation Bonds, Series 2003 A and B. Concurrently, Moody's has affirmed the township's outstanding Aa3 rating, affecting $56.25 million in parity debt, including the current issue, and removed the negative outlook. Of the current issue, $5 million will partially retire short-term notes and finance various capital improvements. The remaining $640,000 will refund pension obligations related to the early retirement incentive, for a 17.6% net present value savings of refunded principal. The Aa3 rating reflects the township's replenishment of reserves to healthy levels, and anticipation of continued strength in financial operations. The rating also reflects the township's large tax base with continued economic development expected, and an above-average debt position.

STABILIZATION OF HEALTHY FINANCIAL POSITION AFTER REPLENISHMENT OF RESERVES IN FISCAL 2003

Moody's expects that Old Bridge will maintain its strong financial position, after replenishing reserves following a decline in fiscal 2002. The Current Fund balance dropped to $6.79 million (17.5% of revenues) in fiscal 2002 from $8.36 million (21.1% of revenues) in 2001. At the same time, the township also liquidated approximately $1 million in reserves in order to avoid a property tax increase. The township passed a significant tax rate increase for fiscal 2003 that generated an additional $3.2 million in revenues, and cut costs through staff reductions and expenditure controls. Unaudited results for fiscal 2003 indicate an increase in reserves to $8.6 million, resulting from the significant tax rate increase as well as conservative budget assumptions and increased revenue derived from ongoing economic development. Although management plans to build reserves further, the fiscal 2004 budget includes the use of $7.3 million in reserves. Management expects to replenish this appropriation fully. Maintenance of reserves at projected fiscal 2003 levels is essential in sustaining credit quality.

ECONOMIC DEVELOPMENT EXPECTED TO SPUR FURTHER GROWTH IN SIZABLE BASE

Moody's expects that Old Bridge's $4.1 billion tax base will continue to grow in the residential and commercial sector, given ongoing construction plans and land availability. Located in central New Jersey, the township is characterized by a predominantly residential tax base (78.1%) with a solid commercial sector (10.1%). Old Bridge has experienced healthy growth, averaging 5.5% annually since 1994, primarily reflective of last year's 33.7% boost in values due to a revaluation. Management anticipates that the potential sale of 500 acres of township-owned land will provide the municipality with a significant amount of additional cash, as well as a substantial increase in taxable property. Demographic indicators are on par with statewide medians, and exceed national figures. Full value per capita is moderate for the region at $67,053.

ABOVE-AVERAGE DEBT BURDEN WITH RAPID AMORTIZATION SCHEDULE

Moody's anticipates that the township's above-average, 4.8% overall debt burden will remain manageable, given limited direct obligations (1.6%), structured borrowing plans, and rapid principal amortization rate (92.4% in ten years). The township regularly issues approximately $3 million each year for ongoing capital maintenance.

KEY STATISTICS

2000 Population: 60,645
2002 Full valuation: $4.066 billion
Full value per capita: $67,034
Per capita income as % of NJ: 99.3%
Median family income as % of NJ: 113.3%
Direct debt burden: 1.6%
Overall debt burden: 4.8%
Payout of principal (10 years): 92.4%
FY02 Current Fund balance: $6.79 million (17.5% of Current Fund revenues)
General obligation debt outstanding: $51.25 million

ANALYSTS:
Jennifer Lewis, Analyst, Public Finance Group, Moody's Investors Service Edith Behr, Backup Analyst, Public Finance Group, Moody's Investors Service Yaffa Rattner, Senior Credit Officer, Public Finance Group, Moody's Investors Service

CONTACTS:
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