SAN FRANCISCO — Standard & Poor’s downgraded Stockton, Calif., for the third time in less than two weeks, to “selective default” from CC.

Standard & Poor’s analyst Chris Morgan said the downgrade, dated Friday, resulted from the city’s missed March 1 payment on lease payments that backed certain lease revenue bonds.

Stockton’s City Council voted last week to defer general fund bond payments through the end of the fiscal year to help improve its finances, and to enter into a mediation process that could either help it avoid a bankruptcy filing or be a precursor to one.

The council’s action caused a technical default on $327 million of lease revenue and pension obligation bonds issued by the city, its redevelopment agency, and its public financing authority.

National Public Finance Guarantee Corp., Assured Guaranty and Ambac Assurance Corp. insure most of the debt.

Standard & Poor’s cut the issuer rating Wednesday to CC from BB, after dropping it the previous week from A-minus. Certain revenue bonds remain at CC.

S&P said it is concerned about the potential implications of the city’s decision to enter negotiations with creditors, including bondholders, to try to reduce debts under terms of a new California law, AB 506. The city has also said it will restate financials for previous years and may not file an audited finance report for fiscal 2011 until June.

Moody’s Investors Service Thursday affirmed the Ba2 rating it assigned after a multi-notch downgrade early in the week. It also cut other bonds issued by Stockton, including dropping its water enterprise bonds to Ba3 from A3.

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