PHOENIX - Moody's Investors Service downgraded about $23 million of Sonoma Valley Health Care District, Calif. general obligation bonds to Baa1 from A1.

Moody's announced the downgrade Sept. 25 and also assigned a negative outlook to the securities. The bonds are secured by the district's voter-approved, unlimited, ad valorem property tax pledge. The county handles the tax collection and disbursement. The district, also known as Sonoma Valley Hospital, serves a rural population of roughly 42,000 people in and around Sonoma.

"The downgrade primarily reflects the district's extremely narrow liquidity and a very weak balance sheet created from a recent trend of negative operating margins," Moody's said.

Moody's said the rating is somewhat bolstered by the district's "large and affluent tax base." The bonds could be upgraded if liquidity improves, Moody's said, but could slip further if the liquidity situation worsens or if renew the district is unable to renew its parcel tax before it expires in 2017.

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