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Hartford, Connecticut’s cash-strapped capital city, suffered a fresh round of credit rating downgrades deeper into junk territory by two Wall Street credit agencies on Tuesday, a day after the city’s bond insurers said they were open to debt restructuring.

The downgrades by S&P Global Ratings and Moody’s Investors Service put Hartford almost at the bottom of the credit scale and mean that the agencies view the city as essentially in default with little prospect for a full bondholder recovery.

S&P slashed its rating by four notches to CC, and Moody’s dropped the city two notches to Caa3.

“A default, a distressed exchange, or redemption appears to be a virtual certainty,” S&P analysts said.

Moody’s cited an “increased likelihood of default as early as November” and said its rating reflects its expectation that bondholders will recover just 65 to 80 percent of their principal investments.

Hartford has roughly $530 million of outstanding debt, much of which is insured by Assured Guaranty Ltd and Build America Mutual Assurance Company.

Both companies said on Monday that they supported a debt refinancing as one way to help avoid a bankruptcy filing by the city.

Bankruptcy litigation would be costly and time consuming, erode confidence among investors and businesses, limit capital market access and increase borrowing costs, they said.

Also on Monday, Hartford’s mayor, Luke Bronin, told bondholders on a conference call that the city has no room left to tax or cut its way out of its fiscal crisis.

That investor call “heightens the likelihood” that Hartford will begin the process necessary to file for bankruptcy, which requires the city to have met with creditors before filing, S&P noted.

A Chapter 9 bankruptcy would also require consent from the governor, treasurer and general assembly, the agency said.

Though a few Connecticut municipalities have been put under the oversight of a state financial review board, none have so far been allowed to go bankrupt.

Both credit rating agencies had just downgraded Hartford within the last two weeks.

“Hartford’s budgetary performance has been weak for several years, and the management environment remains constrained due to a structurally imbalanced budget with no credible corrective plan,” S&P said.

Bronin’s office did not immediately reply to a request for comment on Tuesday.

(Reporting by Hilary Russ; Editing by Leslie Adler)

Topics Agencies