Moody's Investors Service said it has downgraded to Ba1 from Baa3 the city of Crockett, Texas's, tax and waterworks and sewer system surplus revenue certificates of obligation Series 2004, affecting $475,000 outstanding debt.

The certificates are secured by a continuing and direct annual ad valorem tax, levied against all taxable property in the city, and are additionally secured by a junior and subordinate pledge of the net revenues of the city's combined waterworks and sewer system.

The downgrade to Ba1 reflects the city's very narrow financial position that has underperformed expectations in recent years and continued reliance on interfund borrowing to support operations. The rating also incorporates the city's limited tax base with a weak socioeconomic profile and manageable debt burden.

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