LA’s Credit Rating Downgraded Due to ‘Structural Imbalance’ Amid $1 Billion Deficit – IOTW Report

LA’s Credit Rating Downgraded Due to ‘Structural Imbalance’ Amid $1 Billion Deficit

Los Angeles Mayor Karen Bass is currently seeking a state bailout, but given that the state says it has “no capacity” for new spending commitments, it’s unclear if the funding will materialize.

JTN:

Standard & Poor’s 500 downgraded its credit rating of city of Los Angeles general obligation bonds, citing its “weakening financial position and an emerging structural imbalance.” Los Angeles faces a $1 billion deficit, having burned through its once-record reserves in just two years.

Los Angeles Mayor Karen Bass is currently seeking a state bailout, but given that the state says it has “no capacity” for new spending commitments, it’s unclear if the funding will materialize.

S&P warns that if trends continue, it could further downgrade the city’s credit rating, which would further increase borrowing costs due to higher associated risk of default.

At AA-, the new rating still means the city’s bonds are investment grade and well above the junk bond threshold of BB+. However, without changes, S&P warns that there’s a one-in-three chance that it could downgrade the city’s credit rating yet again, reflecting anticipated difficulty in cutting runaway spending. read more

10 Comments on LA’s Credit Rating Downgraded Due to ‘Structural Imbalance’ Amid $1 Billion Deficit

  1. Our youngest brother was a management accountant and had this saying – It is all “fun and games” until no one wants to lend you money anymore.
    My motto is “Don’t spend money you do not have” It has served me well all my life.

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  2. Dump all the police, the fire department and their related admin functions. In a few months come back and begin razing the charred remains. The property will be worth millions once cleared of colored people and white trash.

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