The credit rating agencies are getting tougher all around. The Los Angeles Times reports that despite an improving financial position, Moody’s took LACMA’s bond rating from A2 to A3 on the understanding that it’s ability to repay the 3.5% on $383 million in construction loans would be severely constrained if the museum’s investment portfolio lost a third of its value. LACMA paid $14.7m in interest during the last fiscal year:

LACMA’s portfolio lost 23.4% of its value in 2008-09; Moody’s report, issued Wednesday, said the museum’s investments had bounced back in the ensuing two years with gains of 12.6% and 13.4%.

Barring such a crisis, Moody’s rating pegs LACMA’s bonds as having a “low risk” of default; it cited a number of fiscal strengths for the museum, including “good governance and management” and “good operating performance” in recent years. Govan said auditors are working on the books for the 2010-11 fiscal year that ended June 30, but it appears that LACMA will register an operating surplus in the six figures.

LACMA’s Bond Rating Drops to A3 (Los Angeles Times)