Feb 10 Jefferson County, Alabama, avoided
a downgrade of its already low-rated sewer system debt after
principal and interest payments due Feb. 1 were made, Standard &
Poor's Ratings Services said on Friday.
S&P affirmed the debt's C rating with a negative outlook,
removed it from CreditWatch with negative implications and
warned the rating could still fall to D if a debt service
payment is missed. D is the rating agency's lowest speculative
grade rating, signifying default.
"The C rating already reflects a high degree of fiscal stress
associated with the sewer system and the negative outlook
reflects the potential for the results of the bankruptcy
proceeding to result in some level of non-payment on the rated
sewer bonds," S&P said in a statement.
On Nov. 9, after a tentative agreement with creditors
unwound, Jefferson County filed for bankruptcy, saying it was
overwhelmed by $4.23 billion of debt mostly caused by borrowing
for its sewer system. In January, a U.S. bankruptcy court judge
returned control of the system to county officials from a
The rating agency put the county's $3.16 billion of sewer
system warrants on a watch list for a potential downgrade
shortly after the county filed the largest municipal bankruptcy
in U.S. history.
(Reporting By Karen Pierog; Editing by Diane Craft)