Oct 2 Standard & Poor's said it cut its rating
on Detroit's general obligation debt to D from C on Wednesday
because the city missed payment on its bonds, making S&P the
second ratings agency to downgrade Detroit this week.
Fitch Ratings cut its rating on Monday, citing the city's
imminent debt default.
"The downgrade reflects the nonpayment of debt service to
the paying agent for the scheduled principal and interest
payment date of Oct. 1," S&P credit analyst Jane Hudson Ridley
said in a statement.
S&P said the downgrade affects about $411 million of
unlimited-tax GO bonds and $197 million of limited-tax GO bonds.
Detroit on Tuesday skipped a payment on more than $600
million of general obligation debt that the city's emergency
manager, Kevyn Orr, had determined to be unsecured.
In June, Orr announced a moratorium on paying debt service
on unsecured debt, including certain GO bonds and $1.45 billion
of pension debt that the city defaulted on that month.
With Detroit sinking under more than $18 billion of debt and
other obligations, the city on July 18 filed what would be the
biggest Chapter 9 municipal bankruptcy in U.S. history.
The city is continuing to make payments on its water and
sewer revenue bonds, which Orr had deemed secured, Moody's
Investors Service said on Wednesday.
However, the rating agency warned that the revenue debt still
faces risks, including Orr's assertion that the debt was subject
to negotiation with bondholders and his plan for creating a new
authority to operate water and sewer systems and restructuring
the outstanding bonds.