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Moody's Affirms Indianapolis, IN's Aaa Issuer Rating; Outlook Negative

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Chicago, IL | October 4, 2017
Moody's Investor Service

Moody's Investors Service affirms the 'Aaa' issuer rating on Indianapolis-Marion County (Indianapolis), IN. The rating reflects a diverse economy; improved financial position; and moderate pension liabilities. These attributes are balanced against challenges that include weak resident income indices; a restrictive revenue-raising environment; and high debt levels.

Concurrently, Moody's affirms the following ratings:

  • The Aaa rating on $82 million of outstanding general obligation limited tax (GOLT) debt. The GOLT pledge is subject to Indiana's (Aaa stable) Circuit Breaker taxing limitations. It is rated on parity with Indianapolis' issuer rating given the ample margin under its rate limitation as well as the city's first budget obligation to levy ad valorem taxes for debt.
  • The Aa1 rating on $515,000 of Certificates of Participation (COPs), Series 2010A and 2010B. The rating is notched once from the issuer rating because the pledge to make lease payments is subject to appropriation and the financed assets (public safety vehicles) are more essential.
  • The Aa2 rating on $160 million of Bond Bank Bonds, Series 2010F (PILOT infrastructure Project - Build America Bonds). The Aa2 rating is notched twice from the issuer rating due to the moral obligation (MO) pledge to consider appropriating to replenish the debt service reserve (DSR) and because the financed assets (wastewater system infrastructure improvements) are more essential.
  • The Aa3 rating on $376 million of MO debt issued for economic development projects. The Aa3 rating is notched three times from the issuer rating due to the MO pledge to consider appropriating to replenish the DSR and because the financed projects are less essential.

The outlook on all ratings is negative.

While the city has made progress in improving its financial profile by reducing expenses, its debt burden and limited flexibility to raise revenues weakly position its issuer rating in the Aaa category. If there is no further improvement in financial or leverage metrics over the next 12 to 24 months, the rating could be pressured.