Moody's Investors Service said it has downgraded to Baa2 from A3 the city of Reno, Nev., capital improvement revenue bonds, Series 2002, capital improvement revenue refunding bonds, Series 2005A and capital improvement revenue bonds, Series 2005 B and C (taxable) in the aggregate amount of approximately $130 million.
A negative outlook is also assigned to the rating.
The Baa2 primarily reflects low coverage of annual debt service following a trend of significant declines in pledged revenues. The rating also incorporates exposure to variable rate debt, a somewhat narrow pledge of room taxes buttressed by a portion of city-wide consolidated taxes, as well as a somewhat weak debt and legal structure that includes escalating debt service and a debt service reserve requirement satisfied by a FGIC surety (ratings withdrawn).
The negative outlook reflects Moody's expectations that pledged revenues will remain challenged and coverage will remain weak over the medium-term.