MOODY'S SAYS L.A. FINANCIAL OUTLOOK STILL STABLE.

Byline: Harrison Sheppard Staff Writer

Moody's Investor Service on Thursday re-evaluated the financial implications of San Fernando Valley secession on the city, but declined to change its bond rating or future outlook.

Last week, Fitch Ratings had downgraded the future outlook of the city - a prediction of how the bond rating might change - from ``stable'' to ``negative'' because of the uncertainty connected with secession. The current rating remained at AA, which is considered strong.

Mayor James Hahn has used the Fitch report to argue that secession would mean financial ruin for the city.

Moody's re-examined the city's financial profile after the decision Wednesday by the Local Agency Formation Commission to put Valley secession on the Nov. 5 ballot.

While secession could cause financial problems for Los Angeles, Moody's said, it was ``maintaining our stable outlook on the city's general obligation bond and general fund-related debt ratings. But we will re-evaluate (the) city's ratings and outlook after the November election.''

The city's general obligation bonds are currently rated Aa2. Its essential, fixed-asset leases are rated A1 and its less-essential/equipment leases are rated A2.

Moody's analysts also wrote: ``Los Angeles' debt profile would be weakened after secession, but even assuming the worst case - that the new, smaller Los Angeles would retain responsibility for all outstanding debt - most of its key debt ratios would still compare favorably to those of other major cities in the country.

``Even compared to other large California cities, the debt profiles of which are relatively strong compared to national averages, Los Angeles would go from about average to at worst modestly below average.''