Bloomberg Business week news/Associated Press/Gosia Wozniackahanna Dreier, 8/17/12. "Moody's: More California cities at risk of bankruptcy."
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".... Moody's reports that some cities are turning bankruptcy as a new strategy to take on budget deficits and avoid obligations to bondholders, an emerging dynamic that could have ripple effects throughout the investment community.
.... Moody's would not say which states it will review, though Kurtter mentioned Michigan and Nevada as possibilities. Friday's report noted that cities across the country are in financial distress but said that a greater share of bankruptcies are expected in California. .... More than 10 percent of California cities have declared fiscal crises, according to the Moody's, with the most troubled areas lying inland in the middle of the state and east of the Los Angeles area.
.... Lower bond ratings would increase borrowing costs for cities at a time
when many already are struggling financially because of a steep drop in
tax revenue. Because of that, Friday's report is raising alarms for city
leaders who fear that it could trigger a crisis of confidence that
would hinder their ability to borrow for needed projects. .... Moody's said it will review all California cities in the coming weeks
and conduct in-depth reviews of stressed cities in September, with
reports issued as the reviews are completed." Read Article.
Submitted by Jim Alex
Posted by Kathy Meeh
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