LOS ANGELES - Moody's Investors Service yesterday suspended its Baa rating on general obligation bonds of the Ventura Port District, citing the California port's recent filing for protection under Chapter 9 of the U.S. Bankruptcy Code.
District officials said the filing, which was made Friday, will give them time to decide how to address a $15.6 million court judgment.
The judgment stemmed from breach-of-contract issues raised in a lawsuit filed by Ocean Services Corp., which helped develop shops and other facilities at the port.
Moody's said the district has $1.72 million of GO bonds outstanding.
Richard Parsons, general manager of the district, said in an interview Monday that the bankruptcy filing is "not expected to have any impact" on investors who hold the bonds.
Parsons said he believed the district could continue to make debt service payments because the bonds are secured by voter-approved property tax revenues. The GOs will be paid off by 2002. Parsons said.
Moooy's said it "will monitor events and publish periodic comments or rating updates as needed."
There is some precedent for issuers to continue making GO bond payments while in a bankruptcy proceeding, said Jamie Burr, vice president and assistant director of legal analysis at Moody's.
But such proceedings also "can get messy," he said, adding that Moody's suspended the rating so analysts would have time to "understand the circumstances" surrounding the bankruptcy filing.