Corridor downgrade

When cargo traffic plunges, there's fallout in lots of directions. The latest victim is the Alameda Corridor Transportation Authority, which oversees the 20-mile rail route that speeds up the movement of cargo from the ports of L.A. and Long Beach. Citing the drop in cargo activity, Moody's downgraded $1.7 billion of the authority's bonds and placed the debt on its watch list for potential further downgrades. They're still investment grade, but further downgrades could place them into junk bond category, which would prevent some institutional investors from buying them. From Moody's (via LAT)

The watchlist for downgrade is based on the expectation that, despite recent signs of stabilization, cargo and revenue recovery will be protracted and future debt service coverage levels will be additionally pressured by an increasing debt service schedule. The watchlist will consider the authority's plans to restructure portions of the outstanding debt to try to limit the debt service increases over the next several years. Further review of the ratings will continue as the restructuring plan is finalized.