Moody's Investors Service said it has downgraded to Aa3 from Aa2 the rating on Tacoma, Wash.'s unlimited tax general obligation bonds outstanding in the amount of approximately $21.8 million.

Also, Moody's has downgraded to A1 from Aa3 the city's previously issued limited tax general obligation bonds (LTGO) outstanding in the amount of approximately $236.3 million.

Moody's said it has assigned an A1 rating to the city's limited tax general obligation refunding bonds, 2013.

The outlook on the city's general obligation bonds has been revised to stable from negative.

Proceeds will refund certain maturities of the city's LTGO bonds for annual debt service savings. The LTGO bonds are secured by the full faith and credit of the city within the constitutional and statutory limitations of non-voter approved debt.

The ratings reflect the city's large tax base and diversifying local economy, below average reserve levels attributable to a four-year trend of operating deficits, as well as an average debt burden.

The stable outlook reflects recently stabilized financial operations and indications the city's new management team will slowly improve reserve levels over the medium term.

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