Collingswood's financial troubles continued Monday when the credit-rating agency Moody's did not back off its decision to lower the borough's rating to junk status and warned that a further downgrade was possible.

The agency, which issued its rating in September, acknowledged that analysts had miscalculated the borough's liability on an $8.5 million loan for a struggling redevelopment project.

But it said Collingswood's financial position remained perilous because the $4.5 million the town owes is more than a quarter of the municipal budget and more than four times its cash reserves.

Mayor Jim Maley, who had assured residents he could persuade Moody's to adjust the rating, called the agency's decision "an outrage" and accused analysts of changing the criteria by which the town's finances were judged.

"It's a shell game," he said. "It's clear they're not changing this rating because if they do it too quickly, they were wrong."

Moody's did not respond to a request for comment.

Collingswood borrowed heavily in the 1990s and 2000s to pay for redevelopment projects that transformed it into one of South Jersey's most sought-after inner-ring suburbs. Taxpayers now are wondering what the real cost will be.

At a town-hall meeting after the downgrade, Maley faced a roomful of residents fearful that the town could go bankrupt. More questions will be asked, said resident Mike Halpern, a longtime critic of the mayor.

"Moody's got a clear view of what was going on, and they nailed it," Halpern said. "We shouldn't be arguing this. We should be figuring out how to fix the underlying problem."

With its credit rating unlikely to be upgraded soon, interest rates the borough pays on its debt are expected to rise significantly.

Maley is planning a $4.5 million bond issue to cover the money owed on the redevelopment project and estimated the hike in interest rates would cost the township an additional $100,000 a year. The town's annual budget is $16.7 million.

That $4.5 million payment is due Dec. 7, but Maley said he was confident the lender, Thrift Institutions Community Investment Corp. (TICIS) of New Jersey, a subsidiary of the trade group New Jersey Bankers Association, would extend the loan, as it did in September.

TICIS could not be reached for comment.

To pay down the debt, the town will have to rent unsold condos at the LumberYard, the downtown development marketed to young professionals due to its proximity to the PATCO High-Speed Line.

The project called for 120 units, but during the downturn in the real estate market, plans changed and only 67 units were built.

Three of the 13 unsold units have been rented, Maley said.

"With the increase in the interest rates, we're probably going to need to rent them all," he said.