Standard & Poor's Ratings Services lowered its long-term rating to 'BBB' from 'A-' on San Bernardino Joint Powers Financing Authority, Calif.'s series 2006 housing tax allocation bonds (TABs). At the same time, Standard & Poor's affirmed its 'BBB' long-term rating on the authority's series 2010A and 2010B non-housing TABs. The ratings remain on CreditWatch with negative implications.
"The rating action reflects our view of recent actions by the City of San Bernardino, including its Aug. 1, 2012, filing for protection under Chapter 9 of the U.S. Bankruptcy Code," said Standard & Poor's credit analyst Li Yang. "Even though the series 2010A, 2010B, and 2006 bonds' pledged revenues do not flow through the city's general fund, in our opinion the actions by the city call into question its general willingness to pay debt service," Mr. Yang added.
We have requested cash flow-specific information from the city related to its expected cash flows in the coming years and expect to resolve the CreditWatch in the coming months.
