Investors service downgrades Covington, Ky.'s bond rating

COVINGTON, Ky. – Moody’s Investors Service downgraded Northern Kentucky’s largest city’s bond rating, citing $43.9 million in outstanding debt and “economically sensitive revenue streams.”

Moody’s released their decision last week. The downgrading in investment rating from A2 to Baa1 could adversely affect future funding and interest rates for the city.

Specifically, the rating will affect $2.7 million in outstanding debt.

Moody’s said challenges facing the city include the following:

* A history of general fund deficits

* Extremely limited financial reserves with no near-term plans to increase reserve levels, compounded by a reliance on economically sensitive revenues

* Use of short-term tax and revenue anticipation notes (TRANs) to meet cash-flow needs

* Variable rate debt exposure and elevated pension burdens

Recommended actions the city could take to improve its rating include building an operating surplus that lead to strengthening financial reserves and diversifying revenue streams.

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