Moody's Investors Service yesterday pushed the credit ratings on nearly $8.4 billion of Detroit bonds deeper into the junk category, citing heightened risks the city could file for bankruptcy, undergo a major debt restructuring or do a combination of both, Reuters reported yesterday. The action came a day after Standard & Poor's Ratings Services also downgraded the city's rating and a day before Detroit's emergency manager was set to lay out a restructuring plan for creditors. Kevyn Orr, the bankruptcy attorney Michigan officials tapped in March to run the city as emergency manager, has summoned public labor unions, bondholders, bond insurers and others to a presentation on Friday of "a comprehensive restructuring plan that will require discussion with the various creditor groups of the city," according to a meeting notice. Orr has previously outlined options for dealing with the city's outstanding bonds that call for rescheduling or permanently reducing principal payments, cutting interest rates on the debt, or issuing new debt to provide cash recoveries to creditors.
