Moody's reviewing bond ratings of Southern California cities for possible downgrade

BANKRUPTCY RESOLUTIONS

Steven Cuevas/KPCC

San Bernardino Councilman Rikke Van Johnson explains the municipal bankruptcy process at a town hall meeting.

The credit rating agency, Moody’s Investors Service, said it is reviewing 32 California cities for possible downgrades.

Moody’s is taking a hard look at the ratings of different types of bonds in 30 cities, including Santa Monica, Sacramento, and Fresno.

Other Southern California cities that could see their credit rating downgraded include Downey, Glendale, Huntington Beach, Inglewood and Redondo Beach.

The ratings agency has downgraded the pension obligation bonds of eight other cities.

Moody’s is concerned about the economic pressures on the cities, and that they can’t raise taxes – particularly property taxes - as easily as cities in other states.

Moody’s also cites recent high profile bankruptcies – such as Stockton and San Bernardino - as a warning sign that more cities might choose that strategy of abandoning debt obligations.

The general obligation bond ratings of Los Angeles and San Francisco are under review by Moody’s for possible upgrades.

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