Moody's Investors Service said it has downgraded to A1 from Aa3 the Pequannock River Basin Sewerage Authority, N.J., in conjunction with new sale of $4.5 million sewer revenue refunding bonds, 2012 Series N.
Moody's also affirmed the A1 rating on $6.5 million in parity debt outstanding.
Proceeds of the current bonds will be used to refund the Pequannock River Basin Sewerage Authority's (PRBSA) 1996 L and 2002 M bonds for expected net present value savings of 4%.
The bonds are secured by revenues of the authority's wastewater system, which are generated by annual charges (billed quarterly) from member participants. These annual charges are ultimately secured by the general obligation unlimited tax pledges of the three municipal participants and the A1 rating therefore reflects the underlying credit strength of the participant municipalities.
The downgrade reflects the deteriorated but still strong underlying credit quality of the borough of Bloomingdale (A1) and the borough of Butler.