Moody's Investors Service said it has downgraded to Aa3 from Aa2 the rating on the city of Salina, Kan.'s outstanding long-term general obligation debt.
Concurrently, Moody's has assigned a Aa3 rating to the city's $4.3 million general obligation internal improvement bonds, Series 2013-B and a MIG 1 rating to the city's $3.8 million general obligation temporary notes, Series 2013-1. Post-sale, the city will have $62.9 million of long-term general obligation debt outstanding.
Both the long-term bonds and short-term notes are secured by the city's general obligation unlimited tax pledge. Proceeds of the Series 2013-B bonds will provide long-term takeout financing for the city's general obligation temporary Series 2012-1 notes, which mature on August 1, 2013.
The Series 2013-B bonds will finance a number of street projects and downtown street lighting.
The downgrade of the city's long-term general obligation rating primarily reflects the city's financial profile, which has stabilized following consecutive reserve declines, but with reserves expected to remain at a level that better aligns with the Aa3 rating over the long-term.
The Aa3 rating also incorporates the city's moderately sized tax base and manageable, although above average, debt burden. The MIG 1 rating is based on expected market access for the takeout financing, as well as the long-term credit fundamentals inherent in the city's Aa3 rating.
