Moody’s Investors Service last week revised its outlook on Cedar Rapids’ Aaa general obligation rating to negative as the Iowa city adds to its debt load to finance major development projects.
The action affects $336 million of GO debt and came ahead of the city’s sale of $100 million of new-money and refunding bonds.
The new-money bonds will finance various capital projects and public improvements. The refunding tranche will pay off 2003 and 2004 bonds for nearly 10% of present-value savings.
“The negative outlook reflects our belief that potential challenges posed by the operation of a hotel and convention center could lead to a deterioration of credit quality such that the city’s overall credit profile is no longer commensurate with the Aaa rating,” analysts wrote.
The city’s credit strengths include a strong regional economy, stable financial operations supported by solid revenue-raising flexibility and healthy general fund reserve levels.
