NEW YORK - Moody's Investors Service said it has downgraded to A1 from Aa3 the rating on Pima County, Ariz.'s approximately $108.0 million of outstanding street and highway user revenue fund (HURF) Series 2008 bonds.

The rating was placed under review for possible upgrade with the publication of a new methodology for U.S. municipal bonds backed by special tax revenues on March 27, 2012.

The A1 rating reflects the moderately weak legal structure of the bonds, including a lack of a debt service reserve fund, and the state's decision to lower distributions to underlying municipalities, including the county.

The rating also reflects the strength of the local economy, the broad nature of the pledge, and solid debt service coverage.

The stable outlook incorporates Moody's expectation that the state will not continue to divert HURF revenues in 2013, and that state-wide highway user revenues as well as pledged revenues distributed to the county will begin to grow.

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