Kankakee Co., Ill., Downgraded to Baa1 by Moody's

Moody's Investors Service said it has downgraded to Baa1 from A1 the rating on Kankakee County and the Kankakee County Public Building Commission, Ill.'s $14.4 million of outstanding general obligation debt.

Concurrently, Moody's has downgraded the rating on the county's $6.6 million of outstanding GO limited tax debt certificates to Baa2 from A2. The outlook on the ratings is negative.

The outstanding GO unlimited tax bonds are secured by the county's GO tax pledge without limitation as to rate or amount. The county's outstanding GO limited tax debt certificates are not secured by a dedicated levy, but are secured by the county's GO pledge to pay debt service from any legally available revenues.

The Baa1 rating reflects the county's significant operating shortfalls that are projected to result in a deficit general fund balance position at the close of fiscal 2013, leaving the county vulnerable to future financial stresses.

The Baa1 rating further incorporates the county's sizable tax base with relatively stable valuation trends, weak resident income indices, and modest direct debt burden with significant outstanding capital needs. The negative outlook reflects the likelihood that the county's financial position will continue to weaken given its limited revenue raising ability and ongoing expenditure challenges.

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