Fitch Ratings last week downgraded Missouri’s Howard Bend Levee District debt two notches to the lowest investment-grade level rating.

The agency lowered the rating to BBB-minus from BBB-plus on $19 million of bonds sold in 2005 and another $5.2 million of bonds from a 2007 issue for the district, located about 20 miles northwest of St. Louis.

The outlook is stable.

The bonds are special limited obligations payable solely from a special levee tax against certain benefited properties and by deal-specific, cash-funded debt service reserve funds.

“The downgrade reflects the limited cash available for debt service coverage outside of annual collections,” analysts wrote. “While coverage is still sufficient, the diminished cushion and expectation of further drawdown of capital improvement cash provides less protection against downside risk.”

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