Moody’s Cuts Debt Rating of Financially Troubled San Diego
San Diego’s debt rating on Tuesday was cut by Moody’s Investors Service, which said political turmoil, a pension shortfall and probes are preventing the city from shoring up its finances.
Moody’s lowered the rating on $1 billion of sewer revenue bonds, $300 million of general-fund-backed bonds and $287 million of water utility bonds to A3, the seventh-highest investment-grade rank, from A1. Moody’s also lowered the rating on $279 million of water revenue bonds to A2 from A1, and to Baa3 from Baa1 on $61.7 million of taxable municipal bonds sold for Jack Murphy Stadium.
The city is without an elected mayor after Dick Murphy stepped down in July amid corruption scandals, federal investigations into its bond financings and a pension-fund shortfall that threatens to force the city to cut services or raise taxes. The city hasn’t issued financial statements for the last three years, making it unable to sell bonds.
“The uncertainty is compounded by the city’s fluid political environment and ongoing investigations, which suggest that resolution of the city’s long-term financial challenges is not imminent,” Moody’s said.
“Moody’s does not believe that the city is in imminent danger of declaring bankruptcy,” the company added. “Its resources appear more than sufficient to meet its current obligations.”