Moody's Investors Service said it has downgraded to Ba1 from Baa3 the rating on the city of York, Pa.'s general obligation bonds and removed it from review, affecting $30.1 million of outstanding debt.
The outlook remains negative.
Moody's placement of the rating under review with direction uncertain on February 22 was prompted by a lack of audited fiscal 2011 financial information, which we have since received.
The bonds are secured by the city's unlimited tax pledge.
The Ba1 rating reflects the city's very weak financial position marked by a large accumulated general fund deficit, reliance on cash flow borrowing, a moderately-sized tax base with low wealth and income levels, and an elevated debt burden.
The negative outlook reflects Moody's expectation that the city's finances will remain challenged given that the general fund deficit is unlikely to be eliminated over the near term as well as uncertainty about the city's ability to continue to access the market to secure cash flow borrowing as needed.