March 25 Standard & Poor's on Tuesday cut its credit rating on the bankrupt city of Detroit's water and sewer revenue bonds by five notches, citing their vulnerability to default.
S&P said the rating was lowered to "CCC" from "BB minus" and that the rating remains on watch for further downgrade.
S&P credit analyst Scott Garrigan said in a statement Detroit's proposed plan of adjustment indicates the treatment of the water- and sewer-related debt classes could involve an exchange offer under which investors may receive less value than the promise of the original securities.
"We view such an exchange as tantamount to a default," Garrigan said. (Reporting By Dan Burns; Editing by Chris Reese)