Moody's Investors Service said it has downgraded to A3 from A2 the outstanding rating on the city of Hillsboro, Texas's general obligation limited tax debt.
Moody's also assigned an A3 rating to the city's $6.4 million general obligation refunding and improvement bonds, Series 2012.
A portion ($4.5 million) of the proceeds will be used to refund certain maturities of the city's outstanding bonds for an expected net present value savings and no extension of final maturity. The remaining portion will be used to make street improvements.
The bonds are secured by an annual ad valorem tax, levied against all taxable property in the city within the limits prescribed by law.
The rating assignment and downgrade reflects the city's history of financial operations that includes draws in four of the past five years due to missed revenue targets and some capital needs, below median financial reserves, and low socioeconomic indicators.
The rating also incorporates the city's moderate tax base as well as above median debt burdens.