Update: S&P lowers Tacoma's rating on debt backed by fed

Aug 8, 2011

Soon after downgrading the credit rating of the United States, Standard & Poor’s has taken the city of Tacoma’s rating down a notch from AAA to AA+ on debt it has issued that is backed by the federal government, according to a report in the Puget Sound Business Journal.

Bloomberg reports that S&P downgraded to AA+ from AAA debt backed by federal leases and sold by issuers including Tacoma, Washington; Miami, Florida; the Atlanta Downtown Development Authority and the Board of Governors of the University of North Carolina, the ratings company said in a statement.

The Journal reported earlier that the ratings agency announced at about 11 a.m. Eastern this morning that Tacoma's general obligation bonds were being downgraded with a negative outlook, indicating there may be more downgrades in the future.

“The news was not unexpected and is likely the direct result of the U.S. federal debt downgrade, announced Friday,” the Journals reported.

S&P has begun lowering ratings on municipal debt secured by the federal government, such as prerefunded bonds, tax-exempts backed by U.S. agencies, and credits that are most dependent on federal spending, Bloomberg reported.