Manchester, N.H., Downgraded to Aa3 by Moody's

Moody's Investors Service said it has assigned a Aa3 rating to the city of Manchester, N.H.'s $33.8 million general obligation bonds, Series 2015, and downgraded the rating to Aa3 from Aa2 on the city's $178.5 million of general obligation debt and to A1 from Aa3 on the city's $73.8 million appropriation-backed school facility revenue bonds.

The outlook for all ratings is stable.

The downgrade to Aa3 reflects the city's challenged financial operations, resulting in reduced reserves that will stabilize in the near term, but will be pressured by the local tax cap in the future. The rating also incorporates elevated debt and pension liabilities as well as a sizeable and diverse tax base with average socioeconomic indicators.

The downgrade to A1 on the school facility revenue bonds reflects the one-notch distinction from the GO rating given that the bonds are secured by the Manchester School District's pledge to make annual payments sufficient to pay debt service on the bonds, subject to annual appropriation by the city. The rating incorporates satisfactory legal provisions, the essential nature of the projects funded, and the low risk of non-appropriation by the city.

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