NEW YORK - Moody's Investors Service said it has assigned an A2 rating and negative outlook to the city of Meadville, Pa.'s $10 million general obligation bonds, Series of 2012.
Concurrently, Moody's has downgraded to A2 from A1 the rating on the city's $34.6 million in parity rated debt outstanding and assigned a negative outlook.
The bonds are secured by an unlimited tax pledge and approximately $7 million of the proceeds will be used to refund Series A and B of 2007 for an estimated net present value savings of $467,000, or 5.9% of refunded par. The remaining $3 million in proceeds will fund various capital improvement projects of the city.
The downgrade to A2 reflects declines in the city's limited tax base, a below average and declining demographic profile, above average debt burden, weak internal financial controls, and low general fund reserves, although the city's financial position benefits from additional reserves outside the general fund.
The negative outlook reflects the city's reduced financial position and ongoing weakness in the city's financial management illustrated by material discrepancies in portions of the 2010 audited financial statements.