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Moody's assigns A1 to Lancaster, PA's $125.8M GO Bonds Ser. of 2016; outlook remains negative.

New York: Issue: General Obligation Bonds, Series of 2016; Rating: A1; Sale Amount: $125,820,000; Expected Sale Date: 03/08/2016; Rating Description: General Obligation

Summary Rating Rationale

Moody's Investors Service has assigned an A1 rating to the City of Lancaster, PA's $125.8 million General Obligation Bonds, Series of 2016. Moody's maintains the A1 rating on the city's outstanding long-term parity debt. The outlook remains negative.

The A1 rating captures a satisfactory financial position, a moderately-sized tax base, weak socioeconomic indicators and an elevated debt burden.

Rating Outlook

The negative outlook reflects the city's recent trend of drawdowns, elevated debt, and narrow end-of-year liquidity.

Factors that Could Lead to an Upgrade

Substantial growth in the city's tax base and socioeconomic indicators

Increase in reserves to levels consistent with higher rating category

Significant reduction in debt burden

Factors that Could Lead to a Downgrade

Decline in financial position

Material deterioration of the tax base and socioeconomic indices

Assumption of utility debt by General Fund

Legal Security

The bonds are secured by the city's unlimited ad valorem tax pledge.

Use of Proceeds

Proceeds from the bonds will be used to advance refund the city's General Obligation Bonds, Series of 2007. It is expected that the refunding will result in net present value savings of $6.7 million or 5.78% of refunded principal. The savings will be taken upfront.

Obligor Profile

The City of Lancaster has a population of roughly 59,000 and is located in Lancaster County between the City of Philadelphia (A2 stable) and Harrisburg.

Methodology

The principal methodology used in this rating was US Local Government General Obligation Debt published in January 2014.

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Publication:Daily the Pak Banker (Lahore, Pakistan)
Date:Mar 16, 2016
Words:276
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