March 15 Moody's Investors Service said late on
Thursday it cut Paterson, New Jersey's long-term general
obligation bond rating to Baa2 from Baa1, affecting about $41.9
million of debt with a negative outlook.
The rating agency also cut the city's special emergency
notes to MIG3 from MIG2, affecting about $6.1 million of debt.
The Baa2 rating cut "reflects the city's depleted financial
position with negative reserves net of deferred charges, narrow
liquidity, declining state aid and an increased dependence on
deferred charges," the rating agency said in a statement.
Moody's said the negative outlook reflects its belief that
the city may struggle to structurally balance its budget.
Paterson is also challenged to strengthen its cash and
reserve levels as it faces reduced state aid, a 2 percent tax
cap, pressure from employee salaries and benefits and a weak
economic recovery, Moody's said.