Earlier today, Moody's dropped the rating on Detroit's senior lien water and sewerage disposal debt to Baa1 from A1 and the rating on second lien debt to Baa2 from A2. The last major cut occurred in December, 2010, as we reported here.
Thomson Reuters reports (here) that Detroit's water and sewer systems could also be liable for some portion of an estimated $350 million the City of Detroit may have to pay after a termination of the city's interest rate swap agreements was triggered when Moody's last month cut the city's general obligation bond rating further into the junk category to B2.
- “Moody’s: Detroit Ratings On Review For Cut On Possible State Takeover,” Wall Street Journal, December 7, 2011 (subscription required)
- “Detroit on Review by Moody’s Will Pay $211 Million to Cut Swaps,” Bloomberg Business Week, December 8, 2011
- “Moody’s Puts Detroit GO, Water Debt on Negative Watch,” The Bond Buyer, December 8, 2011
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