San Diego Bond Rating Slashed by Moody’s

San Diego had its bond rating cut two levels by Moody’s Investors Service on Wednesday, the third time the seventh-largest U.S. city has been cut by a rating company since a federal investigation began into its financial practices.

Moody’s cut its rating on $46 million in general obligation bonds two levels to Aa3, the fourth-highest investment grade, and lowered $364 million in other debt two grades to A2, the sixth-highest.

Moody’s followed similar moves in February by rivals Standard & Poor’s and Fitch Ratings.

San Diego plans to sell at least $200 million in bonds to shore up a pension plan and will ask voters in November to approve changes to the city workers’ retirement plan.

Those steps came after the city disclosed a $1.2-billion pension deficit and errors in its financial statements that prompted a federal probe.

The Securities and Exchange Commission has requested documents dating back as far as 1996, the year the city began contributing less than needed to keep pace with its liabilities to the workers’ pension plan.