CHICAGO - Fitch Ratings yesterday downgraded the St. Louis Metro's credit by two notches and warned of further action as the transit agency struggles to resolve a series of operational and capital challenges stemming from the market turmoil of last year and a failed sales tax referendum.

Metro's finance team plans to seek approval for the first phase of a debt restructuring plan at a board meeting later this month, but the agency's looming plans were not sufficient to stall Fitch's action. The rating agency downgraded to BBB-plus from A its rating on $418 million of senior-lien mass transit sales tax appropriation bonds and revised its outlook to negative from stable.

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