NEW YORK - Moody's Investors Service said it has downgraded to Aa2 from Aa1 the rating on the Borough of Englewood Cliffs, N.J.'s $8.28 million of general obligation debt, and assigned the Aa2 rating to the borough's $2.63 million general obligation refunding bonds, series of 2012.

The rating affects approximately $8.28 million of outstanding parity debt. Proceeds from the current issue will be used to advance refund the borough's series 2003 bonds for estimated net present value savings of $90,000, or 3.8% of refunded principal, with no extension of the final maturity or significant change to the bonds' average life.

The downgrade to Aa2 reflects recent pressure on finances and a depletion of reserves to a level much lower than peers', compounded by constraints on operating flexibility.

The rating also incorporates the borough's strong and diverse tax base, which is bolstered by residential properties featuring significant wealth, as well as a substantial commercial presence.

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