Standard & Poor's Ratings Services said it lowered its long-term rating to BBB-minus from BBB on Marysville Public Financing Authority, Calif.'s series 2011 taxable refunding certificates of participation (COPs), issued on behalf of Marysville.
The outlook is negative.
"The lowered rating reflects our view of the city's projected operating deficit in fiscal 2016," said Standard & Poor's credit analyst Jaime Trejo. "The rating is further constrained by the structural imbalance in the city's operations, which we expect will continue. Furthermore, we consider the local economy's income indicators to be very weak," Trejo added.
The rating reflects the city's: very weak economy, with a high county unemployment rate exceeding 10%; weak management, with "standard" financial policies and practices under S&P's financial management assessment (FMA) methodology and the lack of a plan in place that is sufficient to address the city's ongoing structural imbalance; weak budgetary performance, with operating deficits in the general fund and at the total governmental fund level; weak budgetary flexibility, with a low nominal available fund balance ($430,000) that we expect will decrease as a percent of expenditures in the near term from its fiscal 2014 level of 5.8%; very strong liquidity, with total government available cash of 29.9% of total governmental fund expenditures and 5.0x governmental debt service, and access to external liquidity we consider strong; weak debt and contingent liability position, with debt service carrying charges of 6.0% of expenditures and net direct debt that is 87.3% of total governmental fund revenue, as well as overall net debt considered high because sufficiently current overlapping debt figures are not available; and adequate institutional framework score.
