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PEABODY, MASSACHUSETTS GENERAL OBLIGATION BOND RATING REVISED FROM A1 TO Aa

 NEW YORK, Nov. 17 ~PRNewswire~ -- In conjunction with the sale of $4,175,000 in general obligation bonds scheduled for public bids on December 2, Moody's has revised the city's (Peabody, Mass.) rating from A1 to Aa. In upgrading the rating, Moody's noted a long-established trend of strong financial management, coupled with recently signed and financially favorable hospital and landfill agreements that will further increase financial flexibility. Peabody's taxing margin -- the city is 15 percent below its tax rate limit -- and its high general and stabilization fund balances together provide a degree of financial flexibility unparalleled in the Commonwealth. The city's long-standing policy of conservative financial management is underscored by the maintenance of this flexibility during a time of financial stress for many Massachusetts localities. The fact that the city has not had to resort to layoffs and service reductions demonstrates its ability to weather both economic downturns and reductions in local aid.
 Actions taken to ensure long-term fiscal stability include raising water and sewer fees so that revenues fully support operations, including related general obligation debt, and judicious administration of the city landfill. Currently in effect are contracts for use of the landfill that will provide $60 million in revenue over the next twelve years, with additional revenue expected beyond this timeframe as contracts expire and are renewed. With the recent signing of an agreement with a private operator, and expected Commonwealth approval of the transfer, the city will divest itself of the municipal hospital's deficit-ridden operations, putting an end to prior general fund operating subsidies and resulting in payments to the city totalling $2.8 million over the next seven years.
 This divestiture resolves one of the key uncertainties regarding the city's financial operations, and forecasts covering the next four years indicate further growth in the city's taxing margin based on reasonable assumptions for salary increases and conservative estimates of local revenue growth. Over 75 percent of outstanding debt is fully supported by the municipal electric utility. The remaining and relatively minimal general government issuances are structured for rapid payout.
 After the current offering, the city will have outstanding $29,565,000 in general obligation bonded debt. The Aa rating applies to $8,485,000 million, as the remainder is insured and carries a credit rating based on the insurer's credit standing.
 -0- 11~17~92
 ~CONTACT: Kathy Evers, assistant vice president, New England Regional Ratings-Moody's, 212-553-4074~


CO: ST: Massachusetts IN: SU: RTG

LD -- NY094 -- 2107 11~17~92 18:42 EST
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Date:Nov 17, 1992
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