S&P said it gave the lease revenue bonds and Certificates of Participation negative outlooks because it could lower their ratings in the next year "as debt service reserves, sureties, and restricted funds ... are exhausted and/or otherwise not paid to bondholders."
Bondholders in some lease revenue bonds might face a little less risk. "For the series 2004 lease revenue bonds, 2006A lease revenue bonds, 2007A and 2007B lease revenue bonds, and 2009A lease revenue bonds, we understand debt service reserves or surety policies will be sufficient to cover debt service in the fall," S&P said.
It added: "For its series 2003A and 2003B Certificates of Participation and series 2004 revenue bonds ... the city plans to continue to meet contractual requirements for timely payments because of the availability of restricted resources."
Some of the other bondholders also have brighter prospects.
Moody's said it confirmed ratings on the city's water and sewer enterprise debt at Ba3, sewer enterprise debt at Ba1, and two of the community facilities districts' special tax bonds at Baa2.
All of that debt was assigned a "developing outlook" because of how long a bankruptcy could last. Moody's said it made these determinations because "losses are unlikely, although how the bonds continue to perform in a potential bankruptcy remains uncertain."
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