Moody's Investors Service has downgraded the rating on the Middlesex County Improvement Authority, N.J.'s Heldrich Hotel's $28.5 million 2005 Series A and $2.5 million 2007 Series A senior revenue bonds to Caa1 from B3.

The outlook is revised to stable from negative.

The downgrade to Caa1 reflects the continued weak operating and financial performance of the hotel and the narrow cash balances remaining after the debt service payments as well as the depleted FF&E reserve.

The outlook is revised to stable since the competitive environment is unlikely to improve significantly over the near term and the hotel is likely to operate at current financial and operating levels over the next 12 to 18 months.

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