As for Battery Park City bondholders? They have less to applaud.

Credit ratings giant Moody's last week put $1 billion in Battery Park City funds bonds "on watch" for a downgrade, sounding the alarm on what it apparently views as a challenge to the agency's stable financial footing.

Bond Buyer had a story on the issue Monday.

The announcement from Moody's said that while the money the city and state took was not specifically a reserve fund for the bonds, it was a factor in the bonds' high ratings:

Moody's has considered the balance of residual funds that could be used for BPCA purposes if necessary (subject to City agreement) to be a factor in the BPCA's credit strength and a contributor to the high levels of ratings assigned to the Bonds. Moody's is placing the Bonds under review for downgrade pending assessment of the impact of the withdrawals on the ratings.

ebrown@observer.com