July 23, 2012 / 11:04 PM / in 5 years

Moody's cuts Fresno, California to A3

NEW YORK, July 23 (Reuters) - Moody’s Investor Service said on Monday it cut to A3 from A2 the long-term rating for the City of Fresno in California because of the city’s exceeedingly weak financial position.

The Wall Street rating agency also downgraded the city’s pension obligation bonds to Baa1 from A3 and lease revenue bonds to Baa2 from Baa1.

“The downgrade reflects the city’s exceedingly weak financial position and uncertainties imbedded in the city’s adopted budget, most notably $12 million of budget gap closing solutions,” Moodys said in a statement.

“These solutions continue to rely on labor concessions, which have proven to be difficult to achieve and will likely lead to internal deficit borrowing, thereby pushing the available general fund balance further into negative position” Moody’s said.

The move affects around $462 million of debt.

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