Standard & Poor's Ratings Services lowered its long-term rating on West Lafayette Public Library Leasing Corp., Ind.'s series 2012 first-mortgage refunding bonds, issued for and supported by West Lafayette Public Library District, to A-minus from A.
The outlook on the rating is negative because of uncertainty about the future reserve position.
"The downgrade is based on the weakened reserve position and lack of sufficient budgetary adjustments," said Standard & Poor's credit analyst Anna Uboytseva.
Semiannual lease-rental payments paid by the library, on behalf of the leasing corporation, directly to the trustee secure the series 2012 bonds.
"The negative outlook reflects our opinion that the library district reserves are very low on a nominal basis and could continue to decline if management doesn't implement sustainable budget-reduction measures," added Uboytseva. "We could lower the rating if the district's budget adjustments do not materially improve or at least stabilize the library's available cash balances from fiscal year-end 2013 levels. We could revise the outlook back to stable if the library's financial position stabilizes."
