LOS ANGELES — Moody's Investors Service downgraded around $300 million of Fresno, Calif.'s outstanding debt, already junk rated, based on the continued weakness of the city's economy.

Its lease-backed obligations, which were downgraded to junk at the beginning of last year, were downgraded another notch to Ba2 and its convention center bonds, pension obligation bonds, and judgment obligation bonds were downgraded a notch to Ba3.

Fresno does not have any outstanding general obligation debt, but its issuer rating — what the GO rating would be if the city had such debt — has been dropped to Baa1 from A3.

"The ratings continue to reflect the city's exceedingly weak balance sheet, with near complete depletion of reserves, and an oversized fixed cost burden, including debt service on the city's lease-backed obligations, pension obligation bonds, and judgment obligation bonds," Moody's analysts said in the credit report issued late Wednesday.

The city has struggled in the past few years to recover from the financial downturn, implementing many cuts in expenditures and attempting to find new revenues. However, it continues to "weather severe financial distress," as put by city auditors in Fresno's most recent comprehensive annual financial report.

Fresno's labor market is underperforming, relative to the state and the nation, analysts said. The city's total employment has been flat in the last year and remains well below the pre-recession peak.

Its tax base also remains well below its peak, while most other cities in California have enjoyed full recovery of their assessed values.

These credit weaknesses are partly offset by the city's relatively large assessed valuation and its favorable position as the economic center of the San Joaquin Valley.

Fresno also has a well-funded pension system and its moderate post-employment benefit obligation is viewed as "favorable" by Moody's.

The ratings agency also changed its outlook on the city to stable from negative at the lower ratings, saying the city's financial position is stabilizing, though its prospects for improvement in the next two years are limited.

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