By Josh Beckerman

Moody's Ratings changed its outlook for the City of Los Angeles to negative from stable, while affirming the Aa2 rating.

The rating firm discussed various issues related to the Palisades fire. Potential liabilities related to the fire "could put financial strain on the government and the ability of its enterprise operations to achieve full cost recovery and maintain affordability."

Moody's said the city maintains ample liquidity, but could face higher leverage "associated with a sizable increase in capital investments needed for climate adaptation and resilience."

The city's Aa2 issuer rating reflects its "diverse economy and exceptionally large tax base, which has experienced a long expansion that is likely to continue despite the effects of the wildfires," Moody's said. It noted the city's "very strong financial position, as of fiscal 2023, with $3.6 billion in available governmental funds."

Write to Josh Beckerman at josh.beckerman@wsj.com

(END) Dow Jones Newswires

January 22, 2025 19:01 ET (00:01 GMT)

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