DALLAS - Fitch Ratings downgraded Tucson, Ariz., retaining a negative outlook, as the city prepares to issue $78 million of general obligation bonds and certificates of participation.
After the one-notch downgrade May 20, $214.8 million of GO bonds are AA-minus, $259 million of COPs are A-plus, and $11 million of certificates of participation issued in 2009 by the Rio Nuevo Multipurpose Facilities District for renovation of the Tucson Convention Center dropped to A.
"The downgrade is due to a persistent structural budgetary imbalance, driven primarily by increasing outlays for employee benefits and economically sensitive revenue gains that will not keep pace," lead analyst Steve Murray wrote. "Preliminary fiscal 2015 operating results indicate a use of reserves to close a spending gap, a trend expected to continue into fiscal 2016."
S&P has not yet rated the upcoming bonds but last issued a rating of AA-minus.
Also on May 20, Fitch assigned its AA rating and stable outlook to a planned $20.7 million issue of water system revenue obligations.
Moody's Investors Service May 22 assigned its Aa2 rating to the upcoming water revenue deal, and affirmed its Aa2 rating on the water system's outstanding parity senior lien water revenue debt.
