Extraordinary state oversight imposed on Newburgh, N.Y., prompted Moody's Investors Service on Friday to take the fiscally challenged city off watchlist for possible downgrade.

The agency put the city on negative watch April 15 after downgrading it to Ba1 from Baa3, citing its "severely strained" finances, "extremely limited internal liquidity," and heavy reliance on cash-flow borrowing. The rating affects $33.7 million of outstanding long-term debt.

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