NEW YORK - Moody's Investors Service said it has downgraded to Aa3 from Aa2 the city of Dover, N.H.'s general obligation bond rating, affecting $93.7 million parity debt outstanding.
The outlook for the city's rating is stable.
Concurrently, Moody's has assigned a rating of Aa3 to the city's $18.2 million general obligation bonds, Series 2012, and assigned a stable outlook to the rating. Nearly half the proceeds from the sale will be used to refund bonds originally issued in 2003 for a net present value savings in excess of 6% of refunded principal, equal to approximately $600,000. Savings will be taken over the life of the bonds with no extension of the maturity structure. The remaining $9 million of proceeds will be used to fund capital improvements including road, sewer and water line repairs and upgrades.
The bonds are secured by the city's general obligation, unlimited tax pledge. The downgrade to Aa3 reflects the city's relatively modest financial position and our expectation that reserves will not improve significantly over the near-term given a combination of the city's revenue-constraining local tax levy cap, slower economic growth and rising fixed cost pressures related to pensions and other post-employment benefits (OPEB).
The rating also incorporates a moderately-sized tax base that has experienced assessed valuation declines in line with regional trends, and an above-average debt burden. The stable outlook reflects the city's structurally balanced financial operations, experienced management team with a long-term planning focus, diverse local economy with low unemployment levels and our expectation that assessed value declines driven by falling property values have stabilized at the present time.
