Moody's Investors Service said it has downgraded to A3 from A1 the rating on St. Clair County, Ill.'s highway revenue bonds, Series 2005.
Concurrently, Moody's assigned an A2 rating to St. Clair County's $26.7 million highway revenue bonds, Series 2013A and $1.9 million taxable highway revenue refunding bonds, Series 2013B.
The downgrade to the A3 rating on the Series 2005 bonds incorporates the credit quality of the state of Illinois (general obligation rated A2/negative outlook) and the state's ability to reappropriate or otherwise limit pledged revenues; the state's large and diverse economic base from which a portion of pledged revenues are generated; St. Clair County's (GO rated Aa2) large $10.9 billion tax base from which the pledged property tax revenues are generated; and adequate debt service coverage after inclusion of locally-raised property tax revenues that are pledged to debt service when levied.
While revenues generated by the county's matching tax levy are pledged to debt service on the bonds, the county is not obligated to maintain the matching tax levy for the benefit of bondholders. Absent the local tax revenue, maximum annual debt service coverage on the bonds is a narrow 1.0 times based on audited fiscal 2011 financial information.