San Diego’s Rating Is Cut on $2.7 Billion of Bonds

San Diego had its credit rating on $2.71 billion of bonds cut by Fitch Ratings on Wednesday over delays in the filing of its fiscal 2003 financial statement and political struggles over closing a $1.2-billion pension fund shortfall.

Fitch cut the rating on the seventh-largest U.S. city’s $46-million general obligation bond rating three levels to A, the sixth-highest of its 10 investment-grade credit ratings, while cutting $1.1 billion of sewer revenue bonds two levels to A from AA-minus. The rating company also lowered $1.6 billion of bonds by two to three levels.

San Diego’s pension fund has $1.2 billion less than needed to pay all the obligations it will face to retiring city workers over the next several years.

Prices of San Diego bonds were little changed on news of the ratings cut. In the last year, Moody’s Investors Service has lowered San Diego’s credit rating three notches, while Standard & Poor’s withdrew its rating on the city because it hadn’t filed its fiscal 2003 financial statement.