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S&P revises rating outlook on Detroit sewage bonds to negative
June 13, 2013 / 6:57 PM / 4 years ago

S&P revises rating outlook on Detroit sewage bonds to negative

June 13 (Reuters) - Standard & Poor’s Ratings Services on Thursday revised the rating outlook on Detroit’s senior and second-lien sewage revenue bonds to negative from stable due to concerns over debt service coverage levels.

“The negative outlook reflects additional risks that the system may not be able to generate net revenues that provide more than (one times) coverage on all annual debt service and pension obligation costs allocated to the sewer fund, as it did in 2012,” said S&P credit analyst Scott Garrigan in a statement.

Coverage levels could be compromised by increased debt service from 2012 bonds, additional debt to fund improvements and overall severe economic stress in Detroit, the rating agency said. S&P rates the senior-lien bonds A-plus and the second-lien bonds at A.

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