ALBANY, Calif. — Moody's Investors Service downgraded more than $300 million in Fresno, Calif., debt to speculative grade late Wednesday.

The agency downgraded to Ba1 from Baa2 most of Fresno's lease-supported obligations, while the city's pension obligation bonds, judgment bonds and 2006 certificates of participation were downgraded to Ba2 from Baa2.

The actions affect approximately $318 million in debt issued by the Central Valley city of more than 500,000 residents.

Moody's also affirmed Fresno's A3 issuer rating, which is what the rating would be for the city's general obligation bonds would be if it had any.

The outlook on all ratings is negative.

"The Ba1 ratings on most of the city's lease secured obligations reflect the significantly weaker security of these obligations compared to general obligations," Moody's said in a news release. "The four notches between Fresno's issuer rating and the ratings on these lease secured obligations reflect the city's exceedingly weak financial position, the above average burden of these obligations on the city's finances and the continued weakness of the city's economy."

The debt assigned the lower Ba2 rating is either secured with less-essential assets or no assets at all, according to Moody's.

The negative outlook reflects the city's narrow financial position and limited prospect for improvement in the near-term, amid the ongoing risk for added financial pressure from a weak local economy, according to Moody's, noting Fresno's "depleted reserves."

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