Lake Jackson, Texas, Downgraded to Aa3 by Moody's

Moody's Investors Service said it has downgraded to Aa3 from Aa2 the underlying rating to the city of Lake Jackson, Texas's $1.4 million water and sewer revenue bonds., and assigned a Aa3 rating to $2.0 million waterworks and sewer system revenue bonds, Series 2013.

Proceeds from the bonds and certificates will be used for improvements and extensions of the city's waterworks and sanitary sewer systems.

The bonds are secured by a first lien on and pledge of the net revenues of the system.

The downgrade to Aa3 takes into consideration the deterioration of net working capital with reduced financial flexibility and debt service coverage that is not consistent with Aa2 rated systems.

The rating also continues to reflect a moderately sized customer base expected to expand in the near term, a modest debt ratio, and weak legal covenants.

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