Mabank, Texas, Cut to Baa2 by Moody’s

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.

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