Moody's Investors Service said it has downgraded to A1 from Aa3 Port St. Lucie, Fla.'s $113.5 million general obligation bonds.
Concurrently, it downgraded to A2 from A1 $136.3 million certificates of participation (COPs) and non-ad valorem backed conduit, lease and special assessment debt. A negative outlook was assigned to all securities. This concludes the review for possible downgrade.
The downgrades reflect expected near-term declines in general fund balance due to the increased impact of non-ad valorem backed conduit, lease and special assessment debt.
The city covenanted to budget and appropriate non-ad valorem revenues and guaranteed a significant amount of debt related to economic development projects which the general fund is now supporting. Additionally, the Vaccine and Gene Therapy Institute (VGTI) was unable to make a May 1st debt service payment, resulting in an unscheduled draw of $2.6 million on the debt service reserve fund.
It is likely that the city will replenish this payment and take on this debt service in the near term, adding additional pressure to general fund reserves.
