DETROIT, MI - Detroit's bond rating took another hit Thursday.

Moody's downgraded the city's debt citing political instability and a "precariously narrow cash position."

as dropping the city's bond rating to near junk level.

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"The negative outlook on the GO, COPS and GOLT ratings is based on the rising possibility that the city could file for bankruptcy or default on an obligation over the next 12 to 24 months, the general uncertainty of state oversight as challenges to Public Act 72 (PA 72) persist following the repeal of PA 4, and the city's ongoing inability to implement reforms necessary to regain financial stability."

The city's General Obligation Unlimited Tax and Certificates of Participation dropped from B3 to Caa2. Detroit's Water and Sewage Enterprise Revenue debt fell one notch to Baa3 on the senior lien and Ba1 on the second lien.

Moody's said state oversight through PA72, a focused executive leadership group and a strong working relationship with Gov. Rick Snyder were the city's strengths. It cited the city's "weak liquidity" and political instability as "challenges."