July 26, 2013 / 3:51 PM / in 4 years

Detroit bankruptcy case may alter distressed US city behavior-Moody's

July 26 (Reuters) - Detroit’s bankruptcy filing is “profoundly meaningful” for the small number of local governments in the United States that are below investment grade, and could change their approach to pensions and other long-term liabilities, Moody’s Investors Service said on Friday.

Some distressed local governments could even find bankruptcy more appealing if Detroit can use its Chapter 9 case to slash pension benefits or general obligation debt, Moody’s said.

Moody’s rates the vast majority of U.S. cities and towns above Baa3 and doesn’t expect them to be affected by Detroit’s dire situation.

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