Moody's Investors Service downgraded to A2 from Aa3 the long-term issuer rating for Azusa, Calif. Analysts also lowered the rating for the city's 2003 lease revenue refunding certificates of participation to Baa1 from A2. A negative outlook was assigned.

The downgrade is based primarily on the rapid deterioration in the city's financial profile and continued general fund structural imbalance.

Correcting that imbalance will prove challenging, given the city's and region's economic weakness.

The city's cash and reserves have sharply deteriorated due to recent operating deficits and inter-fund transactions.

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