Standard & Poor's said it has lowered its rating on Stockton, Calif., to D from "selective default." The agency said it also lowered the ratings to C from CC on pension obligation bonds, lease revenue bonds and certificates of participation backed by the city general fund. Standard & Poor's said it will keep a negative outlook on the ratings.

"The D reflects our view of the city's planned nonpayment of substantially all of its obligations as they come due," said Standard & Poor's analyst Chris Morgan in the report Wednesday, after the city made clear it plans to file for Chapter 9 bankruptcy this week.

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