Gaylord, Minn., Downgraded to Baa1 by Moody's

Moody's Investors Service said it has downgraded to Baa1 from A1 the rating on the city of Gaylord, Minn.'s general obligation unlimited tax debt.

The city has $14.2 million of outstanding general obligation debt, of which $8.5 million is Moody's rated.

The city's outstanding bonds are secured by its general obligation unlimited tax pledge, although debt service is paid from a variety of sources, including special assessments and enterprise revenues.

The downgrade to the Baa1 rating reflects the city's small tax base that has experienced significant valuation declines, below average demographic profile, high dependence on state aid, and elevated debt burden with very high debt service expenditures.

The rating also considers the city's satisfactory general fund operations and sufficient liquidity despite planned use of reserves and deficit balances in some funds.

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