As Detroit prepares to discuss with creditors how to avoid bankruptcy, Standard and Poor's Ratings Services yesterday lowered the city's credit rating by four notches to CCC minus, Reuters reported yesterday. The downgrade from B, which affects both general obligation bonds and pension obligation certificates, is based on recent announcements from the city's emergency financial manager "that Detroit may take steps to adjust payments to bondholders," said Standard & Poor's credit analyst Jane Hudson Ridley in a statement. The outlook is negative, reflecting expectations that within a year further downgrades are possible. "Should Detroit move to restructure its debt with principal reductions or other changes that negatively affect the full or timely payment to bondholders" or broker any other deal under which investors will get less than originally promised "we would view this as a selective default," the rating agency said. Kevyn Orr, a bankruptcy lawyer who was appointed as Detroit's emergency financial manager in March, is scheduled to meet with the city's creditors on Friday.
