CHICAGO -- Moody's Investors Service has revised its outlook to stable from negative on Springfield, Ill.'s A1 bond rating.

The rating review released last week came ahead of the city's issuance of $28 million of general obligation bonds.

While the debt is secured by the city's authorization to collect property taxes at an unlimited rate, the city expects to cover debt service with proceeds of an additional 0.5% sales tax that took effect Jan. 1.

Proceeds will finance road improvements. The new borrowing brings the city's total outstanding GO debt to $41 million.

The A1 rating reflects the city's sizeable and stable full valuation that benefits from the institutional presence of the state capital, recent trends of favorable general fund operating results that have improved the fund's financial position despite continued narrowness of liquidity, and moderate direct debt burden, Moody's wrote.

The city is challenged by underfunded pension liabilities and the above average share of annual operations comprised of retirement contributions. The outlook revision "reflects the improvement in the city's financial status, which is primarily the result of sound fiscal management that has successfully reversed a prior trend of operational imbalance," Moody's wrote.

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