NEW YORK - Moody's Investors Service said it has assigned an A1 underlying rating to the city of Port Arthur, Texas's $9.805 million general obligation refunding bonds, Series 2012 and $3.275 million certificates of obligation, Series 2012.
Concurrently, Moody's has downgraded to A1 from Aa3 the rating on the city's outstanding parity debt, affecting $49.74 million in outstanding parity debt, net of the refunding.
Proceeds from the sale of the bonds will be used to refund existing debt for at least a 6% net present value savings and no extension of final maturity.
Proceeds from the certificates will fund various HVAC and lighting improvements throughout the city.
The bonds are secured by a continuing and direct annual ad valorem tax levied against all taxable property in the city, within the limits prescribed by law.
The certificates are additionally secured by a limited pledge of a subordinate lien on certain revenues of the waterworks and sanitary sewer system of the city.
The downgrade to A1 reflects the city's ongoing limited liquidity in the general fund. The rating also takes into consideration the city's concentrated tax base and high unemployment but also recognizes the substantial investments occurring in the area that will benefit the city in the future.
Finally, the rating incorporates the high yet manageable debt with potential for future debt although there are no definite plans at this time.
