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Thu November 29, 2012
Detroit's bond rating goes one more step toward the basement
In Moody's world, you can be triple A when you're at your best, or C when you're at your worst.
Detroit is dropping further into the Moody's bond rating basement with the recent worry over the city's financial position. The city might not be able to make a December payroll if they don't meet a state-set benchmark.
The Bloomberg Businessweek headline is "Detroit Bonds Cut Deeper Into Junk as Cash Crunch Nears":
Detroit had its bond ratings cut deeper into noninvestment-grade territory by Moody’s Investors Service, citing a cash crisis that may mean bankruptcy or default in the next 12 to 24 months.
“These downgrades reflect the city’s ongoing precariously narrow cash position and a weakened state oversight framework,” Moody’s analysts Genevieve Nolan and Henrietta Chang said in a statement from the New York-based credit-scoring company. The downgrades affect $8.2 billion in Detroit debt, according to David Jacobson, a Moody's spokesman.
The city's Moody's credit rating went from B3 to Caa1.