The agency said Tuesday it will scrutinize the ratings of various types of bonds in 30 cities in the state. Moody's will examine an array of factors, including falling tax revenue and increased spending.
Cities that it has targeted for possible downgrades are Azusa, Berkeley, Colma, Downey, Glendale, Huntington Beach, Inglewood, Long Beach, Los Gatos, Martinez, Monterey, Oakland, Oceanside, Palmdale, Petaluma, Rancho Mirage, Redondo Beach, San Leandro, Santa Ana, Santa Barbara, Santa Clara, Santa Maria, Santa Rosa, Sunnyvale, Torrance, Woodland, Danville, Santa Monica, Sacramento and Fresno.
Moody's predicts more municipal bankruptcies and defaults in California, the nation's largest issuer of municipal bonds.
Three California cities - Stockton, San Bernardino and Mammoth Lakes - filed for bankruptcy over the summer, although Mammoth's filing was the result of losing a lawsuit.
Meanwhile, Moody's is considering upgrading San Francisco and Los Angeles.
The Associated Press contributed to this report.
