NEW YORK - Moody's Investors Service said it has downgraded the issuer rating (implied GOULT) for Boynton Beach, Fla., to Aa3 from Aa2.

At the same time, Moody's affirms the A1 public service tax revenue bond rating, which affects approximately $28.5 million in outstanding debt. These bonds are secured by the public service tax and the discretionary communication services tax, both being levied at maximum limits.

The downgrade to Aa3 for the city's issuer rating reflects primarily the ongoing structural imbalance in operations that has materially eroded general fund reserves. The Aa3 rating also incorporates the significant assessed valuation contractions that the city has experienced in recent years as well as the city's favorable socioeconomic indices and minimal debt burden.

The affirmation of the A1 public service tax revenue debt reflects historically stable pledged revenue stream, strong debt service coverage levels, and no expectation of further leveraging of the security. The A1 also incorporates the satisfactory legal covenants provided to the bondholders.

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