Moody's Investors Service said it has downgraded to A3 from A1 the rating on the city of Monroe, Ohio's outstanding water revenue bonds.
The city's outstanding Series 2010A and Series 2010B water revenue bonds are secured by net revenues of the city's water enterprise.
Remaining principal on the bonds is approximately $5.4 million.
The downgrade to A3 primarily reflects a breach of covenant in fiscal 2012 as the enterprise failed to maintain coverage of at least 1.10 times maximum annual debt service on the outstanding water revenue bonds.
Fiscal 2012 net revenues provided a slim 1.09 times coverage of annual senior lien debt service and 1.05 times coverage of maximum annual debt service. Further incorporated in the rating is the enterprise's narrow cash position, modest and fairly concentrated service area, and above average debt ratio.
