Moody’s Investors Service has downgraded the Las Vegas Valley Water District’s rating to Aa2 from Aa1, affecting $1.8 billion of debt.

The rating agency said it downgraded the district’s general obligation limited-tax bonds mainly because of a major downturn in the local economy, which was hit hard by a dire housing market that has shrunk its tax base.

Moody’s, noting the district’s narrow cash flow and below-average debt service coverage, kept its negative outlook.

The rating change comes ahead of a $57 million sale of limited tax-bonds slated for May 12.

The district plays a critical role in supplying water to the region, which includes almost all of Clark County, Moody’s noted. 

Analysts added that district management has reduced operating and capital costs to address the financial pressure.

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