NEW YORK - Standard & Poor's Ratings Services said it lowered its issuer credit rating (ICR) to CC from BB on Stockton, Calif. In addition, Standard & Poor's lowered its long-term rating and underlying rating to CC from BB-minus on certain issuances by the Stockton Public Financing Authority and others for which the city is obligor. The ratings remain on CreditWatch with negative implications, where they were placed on Feb. 24.
"The rating actions reflect our view of the city's willingness to meet its obligations following the city council's acceptance on Feb. 28 of management's recommendation to suspend lease payments underlying March 1, 2012 debt service payments on four series for which the city is obligor," said Standard & Poor's credit analyst Chris Morgan.
The CreditWatch listing with negative implications reflects S&P’s view of 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 debt holders and employees.