S&P cuts Monrovia, Calif. credit ratings
Sept 5 |
Sept 5 (Reuters) - Fiscal stress in Monrovia, California, led Standard & Poor's Ratings Services late on Tuesday to lower the city's credit ratings and warn of a further downgrade.
The rating agency dropped Monrovia's issuer rating to BBB-plus from A, while the rating on the city's pension obligation and lease revenue bonds was cut to BBB from A-minus.
"The lowered ratings reflect our view of the substantial drop in the city's available general fund reserves and liquidity and the likelihood that the city's reserve and liquidity levels will remain low in the near term," said S&P credit analyst Li Yang in a statement.
S&P said it has a negative outlook on the lower ratings, citing a recently filed lawsuit against the city by a local developer. It also warned that if Monrovia fails to manage its liquidity needs in the next year, its rating may fall again.
Samuelson & Fetter, the developer, is seeking $106 million from Monrovia, according to a statement on the city's Web site.
The statement from City Manager Laurie Lile said a judgment of that size against Monrovia would be devastating, but that she was optimistic the dispute will be settled.
Monrovia, about 20 miles northeast of Los Angeles, joins the ranks of other California cities with shaky finances. Three of those cities - Stockton, San Bernardino and Mammoth Lakes - have filed Chapter 9 municipal bankruptcies in recent months.
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