Dec 21 (Reuters) - Moody's Investors Service said on Friday it downgraded Orange County, California's 2012 pension obligation bond rating to Aa2 from Aa3.
"The downgrade reflects the additional risk to bondholders from the county's financial, operational and economic conditions over the more secure general obligation pledge," the ratings agency said in a statement.
Moody's also affirmed the county's Aa1 issuer rating and other long-term ratings.
The outlook is negative reflecting the county's continuing narrow fiscal operations "and the pressure that would be applied in event of an adverse ruling in litigation," Moody's said.
The rating agency also assigned its Aa3 rating to the county's upcoming sale of $268.5 million of taxable pension obligation bonds.