BRADENTON, Fla. - Moody's Investors Service late yesterday downgraded Jefferson County, Ala.'s $3.2 billion sewer revenue warrants to Caa3 from B3 in response to the continuing financial crisis the county is under because most of the debt is in variable- and auction-rate securities tied to swaps.

"The downgrade of the sewer revenue debt reflects the heightened probability of default on the county's sewer obligations within the next year and a lack of a concrete plan to avoid such default," said a report by Moody's analyst Geordie Thompson.

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