(Adds S&P rating, Fitch rationale for BBB-plus rating, bond
June 18 Fitch Ratings on Wednesday rated $185.7
million of revenue bonds for Detroit's new public lighting
authority BBB-plus with a stable outlook.
The rating was a notch lower than the A-minus rating Standard
and Poor's Ratings Services assigned to the bonds on June 11.
The bonds are secured by a first lien on Detroit's 5 percent tax
on electric, gas and local telephone utility services.
While Fitch has rated most of Detroit's outstanding debt
below investment grade or D in the case of defaults, the new
bonds were given an investment grade rating, despite the city's
ongoing bankruptcy case.
"The BBB-plus rating reflects Fitch's belief that the
pledged revenues required for debt service belong to the (public
lighting authority) and are therefore not at risk of being
considered property of the city of Detroit. The bankruptcy court
overseeing the city's current Chapter 9 proceeding issued a
ruling supporting this position," the credit rating agency said
in a statement.
The bonds, which will be issued through the Michigan Finance
Authority, are expected to be priced by lead underwriter
Citigroup next week.
Some of the proceeds from the deal will be used to take out
$60 million of floating rate bonds the city privately placed
with Citibank in December to jump start improvements to the
city's ailing public lighting infrastructure.
A federal judge has set an Aug. 14 start date for a hearing
to determine if Detroit's plan to adjust $18 billion of debt and
exit the biggest municipal bankruptcy in U.S. history is fair
(Reporting by Karen Pierog. Editing by Andre Grenon)