West, Texas, Downgraded to Baa2 by Moody's

Moody's Investors Service said it has downgraded the city of West, Texas's general obligation bond rating to Baa2 from Baa1.

At the same time, it assigned a negative outlook to the rating. The downgrade and outlook affects $385,000 in Moody's rated debt. The city also has outstanding $2.5 million of general obligation limited tax debt not rated by Moody's.

The downgrade to Baa2 reflects the city's financial pressure due to sizeable rebuilding costs, already weak reserves, and denial of FEMA assistance. The rating action also incorporates potential elevated debt ratios for rebuilding needs, and expected tax base loss.

Additionally, the rating action reflects the utility revenues, which were largely supporting the limited tax obligations, continue to remain pressured with rebuilding plans still underway, and a disruption in service following the incident.

The negative outlook reflects damage from the explosion will eventually result in tax base declines , and the total impact to the local economy including potential population and sales tax collection loss will be demonstrated over a longer time horizon.

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