Reuters: Bankruptcy News: UPDATE 1-Rating agency S&P lauds Detroit takeover

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UPDATE 1-Rating agency S&P lauds Detroit takeover Mar 15th 2013, 18:05 Fri Mar 15, 2013 2:05pm EDT March 15 (Reuters) - Standard & Poor's Ratings Services on Friday gave a thumbs up on Michigan's takeover of Detroit's finances, revising the city's credit rating outlook to stable from negative and saying the appointment of an emergency manager was a positive step. "The appointment of an EM (emergency manager) allows the city to move forward in a more efficient manner, continuing to make the types of adjustments necessary to regain structural balance," S&P credit analyst Jane Hudson Ridley said in a statement. Michigan officials on Thursday tapped Kevyn Orr, a bankruptcy attorney at law firm Jones Day, to run the state's biggest city, which has been plagued by budget deficits, a high debt load and an outdated government structure. Despite the brighter outlook, S&P kept its rating of Detroit's general obligation debt deep in junk territory at B, citing city budget deficits since 2003, persistent cash-flow problems and a slew of long-term liabilities, including pension and retiree health care costs and potential payments on interest rate swaps. The rating agency also pointed to Detroit's steep population decline that depressed its revenue collections and monthly unemployment rates that have topped 20 percent.

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