(Reuters) – A decision by Wisconsin’s Racine County to give financial assistance to Taiwan-based Foxconn to build a massive liquid-crystal display plant has led to a credit rating downgrade for the county.
Moody’s Investor Service on Wednesday dropped the rating one notch to Aa2 from Aa1, citing anticipated growth in the county’s debt burden after it authorized up to $764 million in financial incentives to support the $10 billion plant.
In September, Wisconsin Governor Scott Walker signed into law legislation for a $3 billion incentive package for Foxconn.
The 20 million-square-foot LCD plant would initially employ 3,000 people, but Walker and Foxconn said the company could ultimately employ 13,000 at the site.
Officials in the Racine County executive’s office did not immediately respond to requests for comment.
The rating action came as Racine County expects to sell $79.2 million of taxable bond anticipation notes to finance land purchases for the project.
Mount Pleasant, the site of the plant, also plans to sell up to $113 million of bonds for Foxconn, in a move that will increase the county’s overlapping debt burden, Moody’s said.
“Based on current borrowing plans, we expect the county’s direct and overlapping debt burdens will remain in line with the current rating. Additional borrowing would present more significant credit challenges,” the credit rating agency said in a report.
Foxconn, an electronics manufacturer formally known as Hon Hai Precision Industry Co Ltd (2317.TW), is a major supplier to Apple Inc (AAPL.O) for its iPhones.
Reporting by Karen Pierog in Chicago; Editing by Matthew Lewis