Moody's Investors Service said it has downgraded to A2 from A1 the city of Methuen, Mass.' long-term rating, affecting $36 million of outstanding debt.
Moody's assigned a MIG 1 rating to the city's $30 million general obligation bond anticipation notes (dated August 9, 2013 and payable August 8, 2014).
Moody's removed the negative outlook on the long-term debt.
The notes are secured by the city's general obligation, limited tax pledge, as debt service is not exempt from the levy limitations of Proposition 2 ½. The BAN proceeds will renew $15 million of previously issued notes and provide $15 million in new money for the city's high school project. The notes will eventually be financed with long-term state qualified bonds.
The MIG 1 rating reflects the city's demonstrated market access and long-term credit characteristics.
The downgrade to A2 reflects the city's negative financial position which has maintained slim liquidity and reserves below 2% of revenues for the past five years. The rating also incorporates the sizeable tax base with average socioeconomic indicators and a manageable debt burden benefiting from a high level of commonwealth school construction aid.