NEW YORK - Moody's Investors Service said it has downgraded the city of Mabank, Texas's rating to Baa2 from A2 affecting $8.1 million in outstanding parity debt.
Concurrently, Moody's has assigned a negative outlook. The bonds and certificates are secured by a direct levy against all taxable property, within the limits prescribed by law. The certificates are further secured by a limited pledge of the net revenues of the city's waterworks and sewer system.
The downgrade to the Baa2 rating is based on the cty's declining reserves and liquidity combined with a limited and concentrated economy.
The city has experienced four consecutive years of declines in general fund balance along with declines in liquidity. The city has a concentrated tax base with the top ten taxpayer composing 34.4% of assessed values.
The negative outlook reflects the uncertainty of management's ability to bolster reserves evidenced by prior deterioration of the general fund balance.