NEW YORK - Standard & Poor's Ratings Services said it lowered its issuer credit rating (ICR) to SD (selective default) from CC on Stockton, Calif.
In addition, Standard & Poor's kept its CC issue ratings on certain series of appropriation-backed obligations and pension obligation bonds of the city and the Stockton Public Financing Authority or Stockton Redevelopment Agency on CreditWatch with negative implications, where they were placed on Feb. 24.
"The lowering of the ICR reflects our view of the city's nonpayment on March 1 of its lease payments that were to back certain lease revenue bonds," said Standard & Poor's credit analyst Chris Morgan.
On March 1, debt service amounts were due on four series for which the city is obligor: Series 2004 lease revenue bonds (parking and capital projects); Series 2007A and 2007B lease revenue bonds; and Series 2009A lease revenue bonds.
The CreditWatch listings with negative implications on the issue ratings reflect the city's concurrent decision to commence proceedings under California Assembly Bill 506, which authorizes a local government to file for bankruptcy protection under Chapter 9 of the federal Bankruptcy Code after a neutral evaluation process that involves confidential negotiations with creditors, such as debtholders and employees.