Moody's Investors Service cut the credit rating of Ferguson, Mo., to "junk" status on Thursday, citing the city's sharply deteriorating finances, reports the St. Louis Post-Dispatch.

The rating agency said the seven-notch downgrade of Ferguson's general obligation rating — to Ba1 from Aa3 — was due to a "severe and rapid" financial deterioration that could lead to insolvency by the end of its fiscal 2017.

"Key drivers of this precipitous drop are declining key revenues, unbudgeted expenditures, and escalating expenses related to ongoing litigation and the Department of Justice consent decree currently under negotiation," Moody's said in a statement.

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