CHICAGO - Ohio, which is struggling with a $2.3 billion budget hole, yesterday received its second dose of bad credit news in a week when Moody's Investors Service lowered its general obligation rating one notch to Aa2 due to the overall deterioration of the state's credit profile and declining financial flexibility.

Moody's took the action ahead of the state's sale this week of $40 million of GO bonds for development of projects that support the use of Ohio coal. The downgrade affected $6.8 billion of GOs. Appropriation-backed bonds were lowered one notch to Aa3, affecting another $2.8 billion of debt. The outlook on the credit is now stable.

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