Reuters: Bankruptcy News: Moody's cut Stockton, California's various rating to Caa3

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Moody's cut Stockton, California's various rating to Caa3 Jun 27th 2012, 21:37 NEW YORK, June 27 | Wed Jun 27, 2012 5:37pm EDT NEW YORK, June 27 (Reuters) - Moody's cut on Wednesday to Caa3 various general fund-supported debt of the city of Stockton, California. "We have downgraded the city's pension obligation debt to Caa3 from B3 and its lease revenue debt to Caa3 from Caa1. The outlook on these bonds is negative" the rating agency said in a statement. It added that its action "reflects the city's June 26 adoption of a budget that would suspend payments on some of its lease and pension obligation bonds backed by its general fund in fiscal 2013 in order to close an approximately $26 million budget gap". Stockton's elected officials approved a 2013 budget on Tuesday night based on the city filing for bankruptcy as soon as Wednesday. A bedroom community of 300,000 some 85 miles east of San Francisco and a casualty of the real estate bust, Stockton is set to become the most populous U.S. city to file for bankruptcy. It has $700 million of outstanding debt. (Reporting By Tiziana Barghini; Editing by Sandra Maler)

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