Moody's Investors Service said it has downgraded Perry County, Ky.'s rating to Baa2 from A3 affecting $4.9 million in outstanding general obligation debt.

The bonds are general obligations of the county and are secured by an unlimited tax pledge.

The county also has an additional $10.7 million in debt outstanding that is not rated by Moody's.

The downgrade to Baa2 reflects continued depletion of total governmental liquidity through the use of previously built up reserves to subsidize the operations of the Jail Fund, and to cover increased road expenditures.

The rating considers that the majority of operating revenues are derived from more volatile intergovernmental sources subject to fluctuations in the coal mining industry.

The rating also reflects a weakening local economy concentrated in coal mining that has seen rising unemployment, below average wealth levels, and a higher than normal poverty rate. Additionally, operational pressures exist with debt service representing 11.3% of total operating expenditures.

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