Troubled Montebello's bonds downgraded to junk status
Montebello’s municipal bonds have been downgraded to junk status, meaning the city may have a hard time securing a loan to help it dig out of a fiscal morass.
Moody’s, a major credit rating agency, downgraded its rating of the city’s 2000-series capital project bonds by two notches to Ba1, meaning that the general fund’s long-term obligations are no longer viewed as investment grade. The city’s outlook as a bond issuer was downgraded from stable to negative.
The city’s general fund owes $16.8 million to the redevelopment agency and is looking at a $1.2-million current-year budget deficit on top of that.
In a bid to remain solvent, the City Council voted Wednesday night –- the same day Moody’s issued its downgrade –- to hire a financial advisor to help sort out its budget issues.
The city awarded $50,000 to FirstSouthwest to move forward with a plan to keep the city solvent. In a report to the council, the company warned that the bond rating downgrade would probably mean higher interest rates on any future loan the city seeks.
Interim City Administrator Peter Cosentini has said the city needs to secure a loan by the end of September or the general fund may run out of cash.
-- Abby Sewell