Moody’s Reviewing JeffCo

Moody’s Investors Service last week said it continues to review Jefferson County’s ratings for possible downgrade. They were placed under review after the county filed for Chapter 9 bankruptcy in November.

The petition is currently pending before U.S. Bankruptcy Judge Thomas Bennett, who has yet to determine whether the county is eligible to enter Chapter 9.

The eligibility is being challenged by a parties arguing that the county is not eligible to file under Alabama law because all its debt is outstanding in the form of warrants.

State law allows local governments with bonds or refunding bonds to file for Chapter 9.

“Moody’s will continue to evaluate the impact of the filing on the credit quality of the [county’s] securities … should the court approve the bankruptcy petition, as well as any other new information,” Moody’s analyst Christopher Coviello said.

The rating agency is monitoring the payment of debt service subsequent to the bankruptcy filing.

Moody’s assigns a Caa3 to the county’s $3.14 billion of sewer revenue warrants, Caa1 to $200.52 million of outstanding general obligation warrants, Caa2 to $83.64 million of outstanding lease-revenue warrants, B3 to $814.08 million of limited-obligation school warrants, and B3 to $32.92 million of special tax warrants.

Jefferson County has continued to make its scheduled debt service payments on the school bonds and the special tax warrants, according to the Moody’s report.

Earlier this month, Standard & Poor’s affirmed its C rating on $2.3 billion of rated sewer system revenue warrants,  removed the ratings from CreditWatch with negative implications, and said the outlook is negative.

Standard & Poor’s does not assign a rating to $792.4 million of the Jefferson County sewer warrants that are in variable-rate mode.

For reprint and licensing requests for this article, click here.
Bankruptcy Alabama
MORE FROM BOND BUYER