Moody’s Investors Service has taken the positive outlook off of St. Paul’s Aa1 rating ahead of the city’s sale later this month of $16 million of new-money general obligation debt.

The review, affirming the rating and revising the outlook to stable from positive, affects $276 million of GOs.

The rating is supported by the city’s role as Minnesota’s capital, a sizeable and diverse tax base, strong financial operations, and a favorable debt profile.

Challenges include a dependence on declining state aid, declines in its tax valuation, and modest variable-rate and swap exposure.

“The revision to a stable outlook reflects our expectation that the city’s financial operations will continue to remain stable, despite a trend of declining assessed valuations and reductions in state aid, due to the strength of the underlying economy and the city’s willingness and ability to make budgetary adjustments to maintain balanced operations,” Moody’s wrote.

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