LOS ANGELES — Huntington Park, Calif. saw the Standard & Poor’s outlook on its pension obligation bonds lowered to stable from positive Monday.
The rating agency cited concerns about the city’s operating deficits, but also affirmed its BBB-plus long-term rating on the bonds.
The rating applies to $23 million in taxable pension obligation refunding debt originally issued as an auction rate security in 2005, but converted to fixed rate on April 1, 2007, according to a filing on the Municipal Securities Rulemaking Board’s EMMA website.
If the city balances its budget and maintains that status for two years, S&P said it could raise the rating by multiple notches. Should the city’s flexibility or liquidity score worsen, or if the city fails to meet its debt obligations, S&P said it could lower the rating.
The outlook revision was influenced by three years of operating deficits, S&P analyst Li Yang said.
"The rating reflects our view of the city's weak economy and management, as well as its weak budgetary performance,” Yang said.
The dense city of 58,792 comprises only three square miles in Los Angeles County; it is roughly five miles south of downtown Los Angeles.
The pension obligation refunding bonds are secured by the city's absolute and unconditional obligation to make debt service payments pursuant to the retirement law.
"The stable outlook reflects our view of the city's very strong flexibility and liquidity scores, as well as its ability, and management's willingness to meet its ongoing debt obligations," Yang said. “It also reflects our expectation that the city will maintain very strong flexibility and liquidity scores in light of its improving revenue streams.”
