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Troubled Compton, Calif., Loses Another Rating

LOS ANGELES — Compton, the troubled city recently sued by the California Public Employees' Retirement System for missed pension fund payments, had its Ba1 rating on $4.9 million of sewer enterprise revenue bonds withdrawn by Moody's Investors Service late Thursday.

Moody's analysts said in the report that the rating was withdrawn due to the city's failure to provide reliable and timely financial information.

In June, the city's former audit firm, Mayer Hoffman McCann, refused to sign off on its financial statements and quit citing allegations of fraud, waste and/or misuse of public monies made by Mayor Eric Perrodin.

According to Moody's, the city had expected to provide fiscal year 2011 financial statements by October.

Compton recently hired the Sacramento-based accounting firm Macias, Gini & O'Connell to conduct an audit, but a final audit isn't expect until late February, according to city officials.

Moody's analysts said they are "unable to provide investors with an informed assessment of the current credit quality of the sewer revenue bonds."

Standard & Poor's suspended its long-term rating on the city's $275 million in outstanding debt in September.

But S&P said in its report that it would reconsider reinstating the rating after the city completes an audit.

CalPERS filed a lawsuit in Sacramento Superior Court after the city fell behind on its retirement and healthcare payments.

The city owes the pension fund $2.6 million and has not made a payment since Sept. 21, said Amy Norris, a CalPERS spokeswoman.

City Manager Harold Duffey said the city plans to issue a $10 million tax revenue anticipate note in the next few weeks that will help the city catch up on CalPERS payments by December.

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