San Francisco Bond Ratings Slip on Deficits

San Francisco, which has suffered from job losses in the technology industry, saw its credit rating on $1.7 billion in bonds lowered Tuesday because of its budget deficits.

Fitch Ratings cut the rating on $891.9 million of San Francisco’s general obligation bonds one level to AA-minus, the fourth-highest rating. Fitch also lowered ratings on $722.8 million in lease-secured bonds to A, four levels above junk, from A-plus, Fitch said.

“Certainly the economy is the driving force behind this,” said Fitch analyst Amy Doppelt. “The recovery has been slower and weaker than we expected.”

San Francisco’s economy was battered by the collapse of the Internet stock bubble in 2000, which sapped funding for the city’s nascent technology companies, and by a slowdown in tourism after the Sept. 11 terrorist attacks a year later.

There are 14% fewer jobs in the city now than there were in November 2000, and the unemployment rate more than doubled to 5.7%, according to California’s Employment Development Department.

The slowdown has left the city confronting budget deficits for the last two years. Mayor Gavin Newsom, who took office in January, will propose a budget by June 1 for the 2005 fiscal year that will seek to cut the city’s costs by eliminating jobs and making agencies run more efficiently, said Darlene Chiu, a spokeswoman.

Moody’s Investors Service rates San Francisco general obligation bonds Aa3, the company’s fourth-highest rating, according to Bloomberg data. Standard & Poor’s assigns its third-highest rating of AA to the debt.