Moody's Investors Service downgraded Sacramento County's pension obligation bonds to Baa1 from A3.
The move is part of the rating firm's systematic review of California POBs and its relationship to general obligation bond ratings. It has downgraded several ratings as a result.
"We believe this pledge is relatively less secure than our prior estimates, both in terms of probability of default and likely losses in the event of default," Moody' said in a report late last week.
Moody's said the GO pledge is the baseline for the county's credit quality, which reflects the two-notch rating difference with the POBs.
The agency also affirmed the county's other long-term ratings, including its A2 issuer credit rating, which Moody's said reflected the county's fiscal position that "remains narrow but continues to gradually improve."
Moody's said the outlook on the county's rating is stable, on the expectation that the economy will continue to slowly improve while it controls costs to maintain general fund cash and reserve levels.
