Moody's Investors Service said yesterday that Detroit's already low credit ratings could sink further if the city is allowed to file for bankruptcy, Reuters reported yesterday. The credit rating agency said that a decision by the city's state-appointed emergency manager and Michigan's governor to authorize a chapter 9 municipal bankruptcy filing would lead to a restructuring of Detroit's debt that could reduce or delay payments on its outstanding bonds. Moody's, which rates Detroit's general obligation debt deep in the junk category at Caa1 with a negative outlook, also said that Detroit could be pushed into bankruptcy if interest rate swap agreements are terminated.
