Stock indexes were down for much of the week, amid the end of a mixed earnings season. There was some good news for the overall economy, however, with U.S. GDP reported to have grown by 2.8% in the third quarter, which was above the growth estimate of 2% and the 2.5% growth seen in the previous quarter. Nonfarm payrolls for October were rolled out on Friday morning with mixed results; the report showed that 204,000 jobs were added to the U.S. economy for the month, compared to the expectation of 120,000, but the unemployment rate rose 0.1% to 7.3% and there was a reported drop in employment by households. Treasury yields peaked by mid-week, before coming down once again on Thursday. Below, we look at Moody's municipal bond upgrades and downgrades from the past week.
Upgrades
- Proctor Hospital, IL: Moody's upgraded this hospital to Aa3 from B2 with a negative outlook. The upgrade to Aa3 with a negative rating outlook reflects an imminent change in bondholder security in conjunction with Proctor's entry into the Obligated Group of Aa3-rated Iowa Health System (IHS) d/b/aUnityPoint Health.
- Guam Waterworks Authority: Moody's upgraded this waterworks authority to Ba1 from Ba2. The upgrade to Ba1 reflects significantly improved financial performance and coverage due to steady rate increases, replacement of faulty meters, and cost savings from improved leak control; progress in addressing outstanding regulatory issues; and a track record of obtaining approval for and enacting needed rate increases.
Downgrades
- Grand Haven Area Public Schools, MI: Moody's downgraded this public schools district to Aa3 from Aa2. The downgrade to Aa3 reflects a narrowed financial position following material uses of available financial reserves in fiscal years 2012 and 2013. The rating also incorporates the district's sizeable tax base located west of the City of Grand Rapids (GOLT rated Aa2, stable), a recent trend of enrollment growth, moderate direct debt burden, and exposure to an underfunded cost-sharing retirement system.
- Conejo Valley Unified School District, CA: Moody's downgraded this school district to Aa3 from Aa2. The downgrade to Aa3 reflects the district's ongoing structural imbalance and narrowing General Fund reserves, as well as exceedingly narrow liquidity resulting from state revenue deferrals.
- City of Brownwood, TX: Moody's downgraded this city to Baa2 from Baa1. The Baa2 rating reflects the city's weakened liquidity positions and increased reliance on water and sewer system transfers to support general government operations. The rating also incorporates a moderately-sized tax base, weak demographic profile, imbalanced financial management and a manageable debt burden.
- Torrance Memorial Medical Center, CA: Moody's downgraded this medical center to A3. The downgrade is attributable to a significant weakening of operating performance through the first eight months of FY 2013 and a trend of declining performance over the last three years. Weaker margins are the result of falling patient volumes and investments in physician practices. The lower performance comes as Torrance is entering the final year of construction on its new patient tower and is in the midst of a large equity contribution to the project.
