Moody's Investors Service said it has downgraded to A2 from Aa3 the rating for the city of Dyersburg, Tenn.'s $9.3 million in outstanding general obligation debt; a negative outlook was assigned.
The bonds are secured by the city's unlimited tax pledge.
The downgrade for the general obligation debt to A2 from Aa3 reflects the city's weakened financial position, driven by consistent over-budgeting of revenues.
The rating also accounts for the city's moderately-sized tax base with below average wealth levels, which have been declining relative to the state over the past two decades, and manageable debt burden with moderate variable rate exposure.
The negative outlook also reflects Moody's belief that the city's weakened financial position may decline further in fiscal 2012.
The city's financial position will be challenged going forward due to the loss of its top taxpayer in fiscal 2013 and the integration of additional operating costs into the budget as a result of the city's takeover of the local airport.
