Moody’s Review May Not Hamper Calif. Cities’ Credit Access

October 10, 2012 – In The News
Law 360

In light of the municipal bankruptcies throughout the state of California, Moody's Investors Services Inc. may downgrade the credit rating of these cities, including Sacramento, Oakland, Fresno, Santa Monica and Santa Barbara.

Michael Sweet said the downgrade would only reflect on credit agency's opinion and not necessarily limit the cities' access to credit markets.

“I don’t think in downgrading certain municipal debt, Moody’s would be saying anything people don’t already know,” he said. “A lot of municipalities in California are having a tough go of it right now. The impact of the foreclosure crisis on municipal revenues coupled with the cost of pensions, the increasing costs of health care for both employees and retirees, and the termination of redevelopment in the state have combined to put extra pressure on local governments to make ends meet.”

“I suppose some people may look at California in its entirety and view it less favorably,” he said. “But others will do their homework and analyze each offering independently.”