Standard & Poor's Ratings Services said it lowered its long-term and underlying ratings on South Amboy, N.J.'s general obligation bonds to A-minus from A-plus.
The outlook is negative.
"We base the downgrade on the city's ongoing reliance on emergency notes for operations," said Standard & Poor's credit analyst Sussan Corson. "The negative outlook reflects our view of South Amboy's limited financial flexibility and potential for further operating deficits and growing emergency note issuance," Corson added.
Should the city fail to restore structural fiscal balance without the use of debt to cover recurring expenditures in the next two years, the agency said it could lower the rating further.
