UPDATE 1-Fitch withdraws ratings on defaulted Detroit bonds

Mon Jun 16, 2014 5:19pm EDT

(Adds reason for ratings withdrawal, second paragraph, background)

June 16 (Reuters) - Fitch Ratings said on Monday it has withdrawn the D ratings on about $2.1 billion of defaulted Detroit bonds.

Amy Laskey, a Fitch managing director, said it was the credit rating agency's policy to withdraw ratings on defaulted issues.

Detroit, which filed the biggest municipal bankruptcy in U.S. history in July 2013, skipped payments on bonds it considered to be unsecured debt, resulting in the defaults.

The affected bonds are about $1.5 billion of pension certificates of participation sold in 2005 and 2006, $411 million of unlimited-tax general obligation bonds and nearly $203 million of limited-tax GO bonds, according to Fitch.

The rating agency said it will continue to monitor the city's bankruptcy proceedings and provide market commentary as appropriate. (link.reuters.com/nap22w)

Laskey said Fitch continues to rate Detroit's water and sewer bonds, which have not be subject to a default. Those bonds are rated BB-plus and BB and are on a watch list for a possible downgrade, she added. (Reporting by Tanvi Mehta in Bangalore and Karen Pierog in Chicago; Editing by Dan Grebler)

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