Moody's Investors Service said it has downgraded to Aa1 from Aaa, the rating on the city of Minneapolis' outstanding general obligation bonds.

Moody's has also removed the rating from review for possible downgrade and the outlook has been revised to stable. The Aa1 rating and stable outlook apply to approximately $679 million of general obligation debt outstanding.

Debt service on the bonds is secured by the city's general obligation unlimited tax pledge. The Aa1 rating and stable outlook reflect the city's role as a regional economic center; consecutive years of valuation declines through 2012; well-managed financial operations with adequate reserve levels, moderating though above average debt burden, and outsized Moody's adjusted net pension liability (MANPL).

The city's rating was placed on review for downgrade due to its large adjusted net pension liability relative to its rating category. The review has been completed with the downgrade of the city's general obligation rating to Aa1. The Aa1 GO rating incorporates the city's sizeable adjusted net pension liability as well as the city's other long-term credit fundamentals.

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