Moody's Investors Service said it has lowered the rating on the town of Colma, Calif.'s 2003 certificates of participation (town of Colma Capital Improvement Projects) to A2 from A1, affecting $12.5 million in outstanding debt.

At the same time, Moody's has affirmed the town's Aa3 issuer rating.

The A2 rating on the certificates of participation reflects the weaker security of these lease-backed securities compared to general obligations.

The two notches between Colma's issuer rating and the rating on its COPs, the minimum distinction applied under Moody's current rating approach, is attributable to the essentiality of the leased assets as well as the town's strong financial position and operating performance.

The Aa3 issuer (general obligation equivalent) rating reflects Colma's strong financial management and ample general fund resources balanced against its small, highly concentrated tax base and above average debt levels.

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