March 25, 2014 / 8:16 PM / 4 years ago

S&P cuts Detroit water and sewer bonds by 5 notches

March 25 (Reuters) - Standard & Poor’s on Tuesday cut its credit rating on the bankrupt city of Detroit’s water and sewer revenue bonds by five notches, citing their vulnerability to default.

S&P said the rating was lowered to “CCC” from “BB minus” and that the rating remains on watch for further downgrade.

S&P credit analyst Scott Garrigan said in a statement Detroit’s proposed plan of adjustment indicates the treatment of the water- and sewer-related debt classes could involve an exchange offer under which investors may receive less value than the promise of the original securities.

“We view such an exchange as tantamount to a default,” Garrigan said. (Reporting By Dan Burns; Editing by Chris Reese)

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