MOODY'S ASSIGNS Aa2 RATING WITH A NEGATIVE OUTLOOK TO CITY OF DEKALB'S (IL) $10.8 MILLION GENERAL OBLIGATION SERIES 2010A AND SERIES 2010B BONDS

Posted on: May 10, 2010, 5:57 pm

NEW YORK, May 10, 2010 -- Moody's Investors Service has assigned a Aa2 rating with a negative outlook to the City of DeKalb's (IL) $6.6 million General Obligation Refunding Bonds, Series 2010A and $4.2 million General Obligation Bonds, Taxable Series 2010B (Build America Bonds - Direct Payment). The current issues will paydown the city's Series 2008 and Series 2009 short-term bond anticipation notes and finance various capital improvements in the city's TIF 1 district. The Series 2010B bonds are expected to be issued as taxable Build American Bonds with the interest payment subsidy from the U.S. Department of Treasury expected to off-set total borrowing costs. Concurrently, we have affirmed the Aa2 rating and assigned a negative outlook to the city's $23.4 million outstanding general obligation debt, including the current offerings. Assignment of the Aa2 rating reflects our expectation the city's tax base will remain stable given the presence of Northern Illinois University (revenue debt rated A3/negative outlook); significant financial flexibility afforded by home rule authority; and a manageable debt position with limited near-term borrowing plans and modest derivative exposure. Assignment of the negative outlook incorporates substantial deterioration in the city's financial position evidenced by an anticipated negative unreserved/undesignated General Fund balance at the close of fiscal 2010...

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