Moody's Investors Service said it has downgraded to A2 from A1 the city of Murray, Ky.'s Electric Plant Board's revenue rating and assigned an A2 rating to the $5.3 million electric plant board revenue bonds, Series 2012.
Moody's revised the outlook to negative.
The A2 rating and negative outlook affects $15.3 million in outstanding parity debt, inclusive of the current sale.
The bonds are secured by a gross revenue pledge of the system.
The downgrade to A2 reflects the system's levered debt ratio and ascending debt service schedule coupled with nominal rate adjustments over the past five years.
The rating also considers the system's modest customer base, significant customer concentration, and improved yet still weak financial reserves. The adequate legal provisions of the relationship with the Tennessee Valley Authority (TVA), the system's sole electric supplier, are also factored into the rating.
Proceeds from the sale of the bonds will be used to finance construction of a new engineering warehouse facility, the acquisition of automated electric meters, and upgrades to the broadband and cable television systems.
