Reuters: Bankruptcy News: TEXT-Fitch says Syracuse bankruptcy unlikely

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TEXT-Fitch says Syracuse bankruptcy unlikely Aug 9th 2012, 19:03 Tweet Share this Email Print Related Topics Bonds News » Bonds » Markets » Bankruptcy » Thu Aug 9, 2012 3:03pm EDT Aug 9 - Fitch believes the city of Syracuse's objective for requesting a legal expert's opinion on municipal bankruptcy is only informational and it is unlikely that the city will pursue bankruptcy in the near future. We also expect the number of cities that express an interest in bankruptcy procedures to increase, presenting challenges to bondholders. Syracuse Mayor Stephanie Miner told The Wall Street Journal that she has asked an outside legal expert to prepare a legal memorandum about the process of municipal bankruptcy, according to an article on August 7. We contacted the mayor to discuss the city's goals in this inquiry and what steps the city has taken. Our conclusion, based on this discussion, is that the city's objective at this time is informational only. No credit factors indicate that bankruptcy is a real possibility in the near future. We expect other cities to express an interest in bankruptcy procedures more frequently as the fiscal stress drags on and that this presents a challenge to bondholders. Some distressed governments that inquire about bankruptcy will exhibit a modicum of financial flexibility, satisfactory reserves, revenue-raising options, or potential for spending cuts. These should be distinguished from governments that inquire after exhausting options and making public statements conveying the possibility of a bankruptcy filing. We expect informational requests and bankruptcy filings to be less frequent in states that provide intervention mechanisms for local governments. The New York State Financial Control Board, for example, was founded in 1975 and has been effective in helping towns to avoid bankruptcy. As the number of local governments that inquire about bankruptcy rises we will continue to monitor the situations and report back. Additional information is available on www.fitchratings.com. The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article, which may include hyperlinks to companies and current ratings, can be accessed at www.fitchratings.com. All opinions expressed are those of Fitch Ratings. Tweet this Link this Share this Digg this Email Reprints We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/ Comments (0) Be the first to comment on reuters.com. Add yours using the box above.

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