Standard & Poor’s Tuesday affirmed its BBB on Miami’s general obligation bonds and its BBB-minus on the city’s non-ad valorem and limited-tax debt.

Standard & Poor’s said the outlook remained negative due to “significantly constrained finances” and concerns about Securities and Exchange Commission investigations, as well as other litigation that potentially exposes the city to “significant liabilities at a time when its available reserves and liquidity are low.”

Miami has $665 million of outstanding debt.

On July 23, the Miami regional SEC office sent the city a so-called Wells Notice stating it would recommend that the commission bring a civil action against Miami for alleged securities violations.

The letter said the SEC could pursue a permanent injunction, a civil penalty and an order to compel Miami to comply with a cease and desist order the city signed in 2003 to resolve previous charges related to disclosure problems.

The SEC opened an investigation in 2009 after Miami struggled financially, and it came to light that the city transferred $26.4 million from its capital projects fund in 20007 and 2008 into the general fund.

The regulatory agency also asked for numerous documents related to the city’s issuance of bonds in 2007 and 2009, and appeared to be concentrating on whether the city properly disclosed its financial condition.

Last week, Miami’s attorneys forwarded a proposed settlement to the SEC in Miami suggesting that the agency issue an investigative Section 21(a) report, which is sometimes used to lay out problems without attaching sanctions or fines. In return, the city said it would improve budget and disclosure practices.

Moody’s Investors Service placed all of the city’s debt on review for possible downgrade after the Wells notice was sent. Moody’s assigns an A2 to the city’s GO bonds.

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