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UPDATE 1-Fitch cuts rating on Wayne County, Michigan to B
March 12, 2015 / 9:42 PM / 3 years ago

UPDATE 1-Fitch cuts rating on Wayne County, Michigan to B

(Adds detail on rating action, other rating downgrades, Detroit bankruptcy)

March 12 (Reuters) - Fitch Ratings on Thursday pushed the credit ratings for Wayne County, Michigan deeper into junk, citing a wider structural deficit and the likelihood of intervention by the state.

The ratings on $186.3 million of general obligation bonds and $255 million of county building authority debt were cut to B from BB-minus. The lower ratings were put on negative watch, signaling they could fall further.

"The downgrade stems from updated county projections showing the structural deficit to be wider and liquidity narrower than previously thought," Fitch said, adding that Michigan was likely to step in and try to reverse the fiscal slide. (bit.ly/1wAy09v)

The state famously intervened in Detroit, Wayne County’s biggest city, which ended up filing the biggest-ever municipal bankruptcy in 2013 and exiting federal court with a debt restructuring plan in December.

Fitch said Wayne County is expected to explore options available under Michigan law, such as an appointed emergency manager or a consent agreement, before bankruptcy would be considered.

Last month, Moody’s Investors Service downgraded the county three notches to Ba3, while Standard & Poor’s Ratings Services cut the rating one notch to BB-plus.

Reporting By Tanvi Mehta in Bengaluru and Karen Pierog in Chicago; Editing by Simon Jennings and Jonathan Oatis

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