Moody's Investors Service said it has downgraded to Baa2 from A3 the rating on the township of East Pennsboro, Pa.'s $31.8 million of outstanding general obligation bonds and has assigned a negative outlook to the rating.
The bonds are secured by the township's general obligation unlimited tax pledge.
The downgrade of the rating to Baa2 from A3 rating reflects the township's increasingly narrow cash reserves and several consecutive years of negative general fund balance, both of which are expected to persist into the medium term.
The Baa2 rating also reflects the township's sizeable base, slightly above average socioeconomic indicators, and manageable debt burden. The township's debt burden is made more manageable by the fact that the majority of the debt is self-supporting.
The assignment of a negative outlook reflects the township's weak overall financial position, as well as uncertainty surrounding the township's ability and willingness to adequately reduce expenditures and/or raise revenue in order to regain structural balance in the near to medium term.