The markets had a down week, as investors came to terms with the impending bond buying taper that could start as early as this month. The DJIA and the S&P 500 both fell throughout the week, and had their biggest one day drop in the past month on Wednesday. The initial jobless claims also gave investors something to worry about, as the claims came in at 368,000, higher than the expected figure of 320,000. The 10-Year Treasury yields climbed throughout the latter part of the week, after a positive retail sales report led investors to believe that the Fed will pull back its stimulus measures sooner than previously expected. Moody's made no municipal bond upgrades this week, so below are the downgrades made since last Friday.
Downgrades
- Sierra Madre, CA: Moody's downgraded this city to Ba1 from A3. The downgrade primarily reflects significantly weakened operating results leading to continued rate covenant violation and rapidly declining reserves. The rating also incorporates a weak track record of implementing rate increases, the enterprise's moderately sized customer base with an above average socioeconomic profile, as well as aging infrastructure that requires significant improvements.
- City of Port St. Lucie, FL: Moody's downgraded this city's general obligation bonds to Aa3 from Aa2. The downgrade of the General Obligation rating reflects the continued weak economic recovery, the recent deterioration of non-ad valorem backed debt that has called for General Fund support, and the expectation of structurally imbalanced operations for the next four fiscal years as the city has elected to finance this support from General Fund reserves rather than from new revenues.
- Algona, IA: Moody's downgraded this city's Municipal Utility's (IA) electric revenue bond rating to A3 from A2. The downgrade to A3 is based on the electric enterprise's financial underperformance compared to initial projections following the issuance of its 2011 revenue bonds. Debt service coverage was below initial projections for fiscal 2012 and is expected to be even lower in fiscal 2013.
- City of Monmouth, OR: Moody's downgraded this city to A3 from A2. The downgrade to A3 for the full faith and credit rating reflects the city's exposure to significant enterprise risk. The city issued full faith and credit obligations for Monmouth-Independence Network (MINET) operations, a competitive telecomm enterprise. MINET has incurred losses since inception, and is an operating burden and long term liability for the city.
