Moody’s Investors Services downgraded the rating on the Arizona Transportation Board’s senior-lien highway revenue bonds to Aa1 from Aaa.

The agency also dropped the board’s subordinated highway revenue bonds to Aa2 from Aa1. The rating action affects $1.27 billion senior-lien and $330 million subordinate-lien bonds. The outlook on the ratings is stable.

The outlook on the highway revenue bonds is stable, reflecting the modest growth in highway user revenue in 2011 following three years of economically driven declines.

The outlook also reflects the expectation that future diversions of pledged revenues will be limited due to reduced general fund budget pressures and the essentiality of the programs funded.

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