The 'BBB' rating on Philadelphia Authority for Industrial Development, Pa.'s bonds reflects the security provided by a service agreement with the city of Philadelphia and is therefore based on the city's general credit characteristics. The 'BBB' rating on Philadelphia's GO bonds reflects the following weaknesses: The city's financial condition is weak, but improving. The fiscal 2005 unreserved deficit balance on a GAAP basis measured $36 million, and on a legally enacted budgetary basis, the city had an accumulated surplus of $96 million. Fiscal 2006 operating results indicate a sizable $158 million budgetary basis operating surplus, while the adopted 2007 budget, net of adjustments, calls for a $43 million draw down of reserves. There are continuing long-standing fiscal problems at the
