NEW YORK - Moody's Investors Service said it has placed the city of Stockton, Calif.'s long-term ratings on review for possible downgrade.
This review includes the city's Baa1 issuer rating, the Baa2 rating on the city's 2007 pension obligation bonds, and the Baa3 rating on its 2006A lease revenue bonds. The review also includes the city's Aa3 rated water enterprise bonds, A2 rated sewer enterprise bonds, and the A3 ratings on two special tax bonds.
The special tax bonds were issued by Community Facilities District No. 1 (Weston Ranch) and Community Facilities District 90-2 (Brookside), but they are administered by the city.
The review results from recent reports on the city's potential, near-term consideration of a bankruptcy filing; a city representative's indication that an EMMA filing will be made on February 24; and the city manager's reported statement that he will ask the city council to consider defaulting on a March 1 debt service payment. The city's lack of denial of these reports contributes to this decision.
Future rating action will consider the content of the EMMA filing; corroboration, if any, of the recent media reports and the city manager's recommendation to default on upcoming debt payments; and the city's other responses to its near-term fiscal challenges.
