Fitch Ratings said it downgraded and withdrew its rating on St. Ignace, Mich.'s $250,000 recreation center project) general obligation unlimited tax bonds series 1998 (matures 11/1/13) to BB from BBB-minus.
The rating outlook is negative.
The bonds are secured by the city's full faith and credit and unlimited taxing power.
The downgrade reflects the city's worse-than-expected financial performance in 2011 and continued draws on cash outside the general fund, further pressuring the city's already distressed financial profile.
The downgrade also reflects Fitch's opinion that financial monitoring tools are weak leaving the city unable to present its interim budget performance and liquidity position in a robust manner.
The city has made adjustments to its revenue and expenditure profile over the past year. However, the negative outlook reflects Fitch's belief that recent adjustments may not be sufficient to stabilize the city's financial position and that further budget adjustments will be difficult for the city to realize because of the city's limited revenue raising capacity and challenges facing the city in implementing the draconian cuts contemplated for the 2013 budget.
Although the level of ongoing information available is insufficient for Fitch to continue to properly assess the city's credit quality, Fitch believes that the BB rating most accurately reflects the city's current credit position based on the limited available information.