S&P puts debt for Hercules, Calif. 'BB' rating on watch negative

Wed Oct 3, 2012 8:52am EDT

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Oct 3 (Reuters) - Standard & Poor's Ratings Services said it
has placed the 'BB' rating of some Hercules Public Financing
Authority, Calif. revenue bonds on CreditWatch with negative
implications, citing the uncertainty over the city's willingness
to repay some debt.
    "The CreditWatch placement reflects our uncertainty
surrounding the city's willingness to pay its obligations after
the city's statement in a September 25, 2012 material event
notice" said S&P on Tuesday.
    The rating agency placed on credit watch with negative
implication the 2010 electric system project revenue bonds,
series 2012 electric system project revenue refunding bonds,
series 2003B lease revenue bonds and series 2009 taxable lease
revenue bonds issued for the city of Hercules. 
    The debt service payments of these bonds are secured by a
city covenant to advance funds to cover the net electric system
revenue. 
    The city said in its material event notice, it "does not
anticipate there will any available funds to make such advances
in the foreseeable future and does not expect to make any such
advances."
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