Risks remain on Detroit water, sewer bonds, despite payment -Moody's


Oct 2 (Reuters) - Moody's Investors Service said onWednesday that risks remain for Detroit's water and sewerrevenue bonds, despite a full Oct. 1 payment by the city on thedebt.

An assertion from Detroit's emergency manager that the debtis subject to negotiations with bondholders raises the prospectof losses or a "distressed exchange" for bondholders, Moody'ssaid in a comment.

Detroit became the biggest U.S. city ever to file forbankruptcy in July, and investors are watching how the emergencymanager and the courts want to treat various classes ofmunicipal bonds. Moody's rates the water and sewer bonds B1 forsenior lien bonds and B2 for second lien bonds.

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