Midland, Texas, Water Revs Cut to Aa3 by Moody's

Moody's Investors Service said it has downgraded to Aa3 from Aa2 the revenue rating on the city of Midland, Texas, water and sewer system's senior lien and junior lien revenue bonds and has revised the outlook to negative.

The Aa3 rating and negative outlook affects $10.9 million in outstanding debt.

The senior lien and junior lien revenue bonds are secured by a pledge of net revenues of the water and sewer system.

The downgrade to Aa3 from Aa2 reflects the system's leveraged debt profile, decreased water supply available to the system, depressed financial performance in fiscal 2012 as a result of limited water supply and use restrictions on the customer base.

The assignment of a negative outlook reflects the system's water supply limitations and use restrictions, narrow timing of project completion given CRMWD projected date of water supply exhaustion, and the uncertainty regarding availability of water supply to match current pro-forma projections as it relates to project completion.

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