Allentown’s Bond Rating Downgraded To A3 With A Negative Outlook

English: City of Allentown from east side

English: City of Allentown from east side (Photo credit: Wikipedia)

Allentown‘s bond rating has been downgraded from A2 to A3 with a negative outlook, Moody’s Investors Service announced this week.

According to Moody’s, the new rating reflects the city’s approximately $120.3 million debt as well as “four consecutive operating deficits which have largely been driven by aggressive budgeting of city revenues and reserve appropriations to balance the budget.”

Investors use credit ratings such as Moody’s to determine the risk of a municipality’s defaulting on debt payments. A lower rating can force municipalities to pay higher interest rates to compensate for the risk, increasing the cost of borrowing.

Allentown’s weak socioeconomic profile — a sizable and mature urban tax base with below-average “socioeconomic indices” — and limited financial flexibility are challenges to the city, according to Moody’s.

Read more: http://www.mcall.com/news/local/allentown/mc-allentown-pa-bond-rating-downgrade-moodys-20121012,0,5203322.story

Pennsylvania Dropped A Notch By Credit-Rating Agency

The New York-based credit ratings agency Moody’s Investors Service has slapped a lower rating on Pennsylvania‘s debt as state budgetmakers face spiraling public pension costs.

Monday’s downgrade means Pennsylvania is now closer to the bottom of Moody’s ratings for the 47 states with general obligation debt.

Thirty states still have ratings of Aaa or Aa1, while Pennsylvania joins 16 other states with an Aa2 rating or below.  Moody’s had boosted Pennsylvania’s rating to Aa1 in 2010.

Read more: http://lancasteronline.com/article/ap/689214_Pa–dropped-a-notch-by-credit-rating-agency.html#ixzz20pkx2F2i

York-Based Bon-Ton Store’s Bonds Being Shunned By Investors

Investors are shunning Bon-Ton Stores Inc.‘s bonds – a bad sign for the York-based department store chain with seven stores in the Lehigh Valley.

In contrast, other retailers have recently gained from rising consumer confidence in the U.S.

Bon-Ton’s $480 million of 10.25 percent notes due in March 2014 lost 2.8 percent last month, the worst performance of any bonds in the Bank of America Merrill Lynch U.S. High Yield Super Retail Index, which climbed 1.7 percent overall. Moody’s Investors Service put its Caa1 rating for the securities on “negative outlook” on Dec. 1, citing the company’s “persistent underperformance.”

Read more: http://www.mcall.com/business/mc-allentown-bontton-20120103,0,3027398.story

Moody’s Investors Service Reviewing Penn State Bond Rating For Possible Downgrade

More bad news for Happy Valley!

Due to the charges against Jerry Sandusky, a major credit agency is reviewing Penn State’s Aa1 bond rating for a possible downgrade.  Moody’s Investors Service stated on Friday they have put Penn State’s bond rating under review due to the damage of the university’s reputation by the child sexual abuse scandal.

Moody’s will assess things like lawsuits brought against the university, enrollment decline, loss of donations and any change in the university’s status with the Commonwealth of Pennsylvania.

Needless to say, this action could negatively impact Penn State and the university’s ability to recover from the scandal.  Penn State is a major employer in Pennsylvania.  According to Wikipedia,”The university is now the largest in Pennsylvania, and in 2003, it was credited with having the second-largest impact on the state economy of any organization, generating an economic effect of over $17 billion on a budget of $2.5 billion.”