UPDATE 1-S&P cuts Vadnais Heights, Minn. long-term rating to 'D'
Feb 26 (Reuters) - Standard & Poor's Ratings Service on Tuesday said it cut Vadnais Heights, Minnesota's series 2010A, B and C annual appropriation lease revenue bonds, long-term rating to D from CC.
The downgrade reflects the city's principal payment default on $455,000 of bonds on Feb. 1, the rating agency said in a statement.
The rating agency said the city in the beginning of fiscal 2013 decided not to appropriate funds for its lease revenue bonds and does not intend to do so in the future.
S&P said proceeds from a sports facility had been expected to cover annual debt service of $1.6 million but in 2011, its first year of operation, it only generated $300,000 after operations to contribute to debt service.
In September, Moody's Investors Service downgraded Vadnais Heights general obligation bond rating to Ba1 from Aa2, and assigned them a stable outlook.
"The downgrade reflects the city's lack of willingness to pay on a lease obligation that supported debt issued in the capital markets," said Moody's in a statement.
Vadnais Heights is located in Ramsey County and is a second-ring suburb seven miles north of St. Paul.