Moody's Investors Service said it has downgraded to Baa2 from A3 Boyd County, Ky.'s general obligation rating and assigned a Baa2 rating to the county's $4.2 million general obligation refunding bonds, Series 2013.

The downgrade to Baa2 affects $14.6 million in outstanding Moody's-rated parity debt, exclusive of the current issue. The county has approximately $11.9 million in other debt obligations not rated by Moody's.

Proceeds from the current sale will refund certain maturities of the county's Series 2004 and 2005 bonds for an estimated net present value savings of 6.6% of the refunded bonds no extension of maturity.

The bonds are general obligations of the county and are secured by the county's ability to levy an annual tax on all taxable property, without limitation as to rate, on all taxable property within the county.

The downgrade to Baa2 reflects a deterioration of the county's limited financial position beyond management projections for fiscal year 2011.

The downgrade also incorporates the county's negative fund balance in multiple governmental funds and weak financial management characterized by deficient internal control processes as cited by the Kentucky State Auditor of Public Accounts in the fiscal 2011 independent auditor's report.

The rating also considers the county's use of short-term cash-flow borrowing, large tax base, and below average socioeconomic profile.

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