Moody’s Investors Service lowered its rating by three notches to A3 from Aa3 and assigned a negative outlook to Brainerd, Minn.’s $8.9 million of outstanding electric utility revenue bonds. The city issued the debt in 2007. The bonds are secured by net revenues of the electric utility.

Analysts said their action reflects the utility’s failure to meet its rate covenant in fiscal 2011, weak financial operations pressured by increasing purchase power costs, and an unwillingness to adjust rates.

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