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Announcement:

MOODY'S ASSIGNS A1 RATING AND NEGATIVE OUTLOOK TO CITY OF BURLINGTON (IA) $3.3 MILLION GO CORPORATE PURPOSE BONDS, SERIES 2012A, AND $3.4 MILLION GO REFUNDING BONDS, SERIES 2012B

Global Credit Research - 22 Dec 2011

AFFIRMS A1 RATING AND REVISES OUTLOOK TO NEGATIVE ON CITY'S OUTSTANDING GO DEBT

New York, December 22, 2011 -- Moody's Rating

Issue: General Obligation Corporate Purpose Bonds, Series 2012A; Rating: A1; Sale Amount: $3,300,000; Expected Sale Date: 2-6-2012; Rating Description: General Obligation

Issue: General Obligation Refunding Bonds, Series 2012B; Rating: A1; Sale Amount: $3,390,000; Expected Sale Date: 2-6-2012; Rating Description: General Obligation

Opinion

Moody's Investors Service has assigned an A1 rating and negative outlook to the City of Burlington's (IA) $3.3 million General Obligation Corporate Purpose Bonds, Series 2012A, and $3.4 million General Obligation Refunding Bonds, Series 2012B. Concurrently, we have affirmed the A1 rating and have revised the outlook to negative on the city's outstanding general obligation debt. Post sale, the city will have $39.3 million in outstanding general obligation debt.

SUMMARY RATINGS RATIONALE

Debt service payments are secured by the city's unlimited taxing authority. Proceeds from the 2012A series will fund capital projects, primarily the replacement of the city's Cascade Bridge. Proceeds from the 2012B series will current refund the city's outstanding General Obligation Corporate Purpose Bonds, Series 2001C and Series 2002 for expected interest savings of 7.4% of the refunded par. The A1 rating reflects the city's limited financial flexibility as represented by thin General Fund reserves and narrow government-wide cash position; relatively stable economy located along the Mississippi River in southeast Iowa (Aaa/stable outlook); and manageable debt burden.

The negative outlook reflects the city's very limited cash position in both governmental and enterprise funds with no concrete plans to build up cash reserves to adequate levels. The negative outlook additionally reflects long outstanding interfund advances, namely advances from the sewer fund to other enterprise funds, with no specific plans for repayment. The city's limited cash position and the outstanding advances to several funds indicate that the city currently has limited cushion to protect against future budgetary stressors.

STRENGTHS

- Relatively stable economy and presence as a manufacturing and trade center for the surrounding area

- Annual growth in full value has continued despite the broader economic downturn of recent years

CHALLENGES

- Limited liquidity government-wide with no concrete plans to improve liquidity to adequate levels

-Socio-economic indices lag state and national medians and have declined relative to those medians in recent decades

Outlook

The negative outlook reflects our expectation that, given the city's lack of concrete plans to build up cash reserves to adequate levels , it will continue to hold limited cash in both governmental and enterprise funds. The negative outlook additionally reflects long outstanding interfund advances, namely advances from the sewer fund to other enterprise funds, with no specific plans for repayment. Continued operating losses in the enterprise funds may lead to further reliance on the sewer fund to support their cash needs, limiting the sewer fund's ability to respond to unexpected budgetary variances or capital needs of the system and potentially negatively impacting the General Fund if the sewer enterprise is no longer able to make its PILOT payments in full.

WHAT COULD CHANGE THE RATING -- UP (or removal of the negative outlook)

-Substantial growth in government-wide reserves and cash balances, bolstering financial flexibility and liquidity

-Ongoing diversification of the economy including an improved socioeconomic profile

WHAT COULD CHANGE THE RATING - DOWN

-Deterioration of already narrow General Fund reserves and liquidity

-Failure to restore liquidity and flexibility through the build-up of cash reserves government-wide

-Weakening of the local economy as evidenced by valuation declines, increased unemployment, and/or deterioration of the city's socio-economic profile

PRINCIPAL METHODOLOGY USED

The principal methodology used in this rating was General Obligation Bonds Issued by U.S. Local Governments published in October 2009. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

Although this credit rating has been issued in a non-EU country which has not been recognized as endorsable at this date, this credit rating is deemed "EU qualified by extension" and may still be used by financial institutions for regulatory purposes until 31 January 2012. ESMA may extend the use of credit ratings for regulatory purposes in the European Community for three additional months, until 30 April 2012, if ESMA decides that exceptional circumstances arise that may imply potential market disruption or financial instability. Further information on the EU endorsement status and on the Moody's office that has issued a particular Credit Rating is available on www.moodys.com.

For ratings issued on a program, series or category/class of debt, this announcement provides relevant regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides relevant regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides relevant regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

Information sources used to prepare the rating are the following: parties involved in the ratings, parties not involved in the ratings, and public information.

Moody's considers the quality of information available on the rated entity, obligation or credit satisfactory for the purposes of issuing a rating.

Moody's adopts all necessary measures so that the information it uses in assigning a rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

The GMO - PFG Ratings News
UNKNOWN
Public Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
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U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Emily Robare
Analyst
Public Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

MOODY'S ASSIGNS A1 RATING AND NEGATIVE OUTLOOK TO CITY OF BURLINGTON (IA) $3.3 MILLION GO CORPORATE PURPOSE BONDS, SERIES 2012A, AND $3.4 MILLION GO REFUNDING BONDS, SERIES 2012B
No Related Data.

 

© 2013 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

 


CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. ("MIS") AND ITS AFFILIATES ARE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND CREDIT RATINGS AND RESEARCH PUBLICATIONS PUBLISHED BY MOODY'S ("MOODY'S PUBLICATIONS") MAY INCLUDE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY'S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL, FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY'S OPINIONS INCLUDED IN MOODY'S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. CREDIT RATINGS AND MOODY'S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY'S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY'S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY'S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY'S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

 


ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT. All information contained herein is obtained by MOODY'S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided "AS IS" without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources Moody's considers to be reliable, including, when appropriate, independent third-party sources. However, MOODY'S is not an auditor and cannot in every instance independently verify or validate information received in the rating process. Under no circumstances shall MOODY'S have any liability to any person or entity for (a) any loss or damage in whole or in part caused by, resulting from, or relating to, any error (negligent or otherwise) or other circumstance or contingency within or outside the control of MOODY'S or any of its directors, officers, employees or agents in connection with the procurement, collection, compilation, analysis, interpretation, communication, publication or delivery of any such information, or (b) any direct, indirect, special, consequential, compensatory or incidental damages whatsoever (including without limitation, lost profits), even if MOODY'S is advised in advance of the possibility of such damages, resulting from the use of or inability to use, any such information. The ratings, financial reporting analysis, projections, and other observations, if any, constituting part of the information contained herein are, and must be construed solely as, statements of opinion and not statements of fact or recommendations to purchase, sell or hold any securities. Each user of the information contained herein must make its own study and evaluation of each security it may consider purchasing, holding or selling. NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER WHATSOEVER.

 


MIS, a wholly-owned credit rating agency subsidiary of Moody's Corporation ("MCO"), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MIS have, prior to assignment of any rating, agreed to pay to MIS for appraisal and rating services rendered by it fees ranging from $1,500 to approximately $2,500,000. MCO and MIS also maintain policies and procedures to address the independence of MIS's ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading "Shareholder Relations — Corporate Governance — Director and Shareholder Affiliation Policy."

 


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© 2013 Moody's Investors Service, Inc., Moody’s Analytics, Inc. and/or their affiliates and licensors. All rights reserved.
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