Moody's drops Atlantic City bond rating 6 notches after New Jersey appoints emergency managers

Wall Street is giving a big thumbs-down to New Jersey's effort to tame Atlantic City's finances.

Moody's Investors Service on Friday lowered Atlantic City's bond rating by six steps, from Ba1 to Caa1, which is deep into junk territory.

The move came a day after Gov. Chris Christie appointed corporate turnaround specialist Kevin Lavin as the city's emergency manager and Kevyn Orr, who helped Detroit through its bankruptcy filing, as his assistant.

Christie's executive order appointing the pair indicates a bankruptcy filing is possible to help reduce the city's debt, which Moody's calculated at $397 million.

The agency cited an increased risk of default, and "a rapid, dramatic change" in New Jersey's longstanding policy of preventing a default or bankruptcy of any of its local governments.