Le Center, Minn.’s rating sunk further into junk bond territory following a downgrade citing fiscal woes that include cash flow borrowing to cover debt service. Moody’s lowered the city’s rating to B1 from Ba2 and assigned a negative outlook to its $7.3 million of rated general obligation debt. The city has another $5 million of GOs not rated by the agency.

The rating reflects the city’s heavy reliance on cash flow borrowing from a local bank to fund ongoing operations, including its GO debt service; limited financial flexibility; and narrow cash balances following years of aggressive budgeting assumptions and annual operating deficits, Moody’s wrote.

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