Long Beach bonds maturing in July 2015 traded at an average yield as low as 1 percent this month, data compiled by Bloomberg show. While that was the lowest since the city issued the debt in 2005, it was still almost three times the interest rate on benchmark tax-exempt bonds. The yield spread over top-rated securities has averaged about 1 percentage point this month, down from about 1.3 percentage points in the month before the storm, using BVAL analysis.

The bonds are rated A2 by Moody’s, five steps below the top, with insurance from Assured Guaranty Corp. Without that backstop, the securities are graded Baa3, one level above junk. In December, Moody’s affirmed the grade with a negative outlook, saying it’ll watch to see if property values rebound.

Company Ahead

Other municipalities will probably join Long Beach in seeking deficit financing during the legislative session ending in June, state Comptroller Thomas DiNapoli said in an interview in Albany.

Rockland County, a suburb north of New York City, is seeking $80 million to close its gap. In June, Standard & Poor’s lowered the county to BBB-, one step above speculative grade, after lawmakers blocked a similar request for deficit bonding that would have helped close a $40 million imbalance.

DiNapoli said the requests show municipalities are struggling with revenue that hasn’t recovered from the recession that ended in 2009 and a 2 percent property tax cap introduced under Governor Andrew Cuomo.

“We’re going to see more and more localities in severe fiscal stress,” DiNapoli said. “Places like Long Beach that had problems before the storm are facing real troubles.”

Suffolk Shortfall

In March 2012, Suffolk County Executive Steve Bellone declared a fiscal emergency after Suffolk’s spending plan ended out of balance for the first time in two decades. The home of Long Island’s Hamptons beach towns was cut one level to A by Fitch Ratings last month. The county’s budget office projects a $51 million shortfall in 2013 on lower sales- and property-tax revenue because of Sandy, Fitch said.

Property values in Long Beach are already recovering, Schnirman said. The city doesn’t want to participate in a $400 million program Cuomo proposed to buy out beachfront homes that are in danger of flooding, he said.