Standard & Poor's Ratings Services said it has assigned its A-minus rating to Michigan Finance Authority's local government loan program revenue bonds series 2014G, issued for the city of Detroit and secured by the city's unlimited tax general obligation pledge and a fourth-lien pledge of distributable state aid revenues.
At the same time, Standard & Poor's affirmed its ratings on Detroit's distributable state aid (DSA) bonds series 2010 (AA; closed first lien), series 2010E and 2012B (AA-minus; second lien) bonds, and series 2012C (A-plus; third lien), issued by the authority. The outlook is stable.
"The rating on the bonds reflects our view of maximum annual debt service coverage dropping to 0.66x from the constitutional portion of distributable state aid after adding in the fourth-lien bonds; and the pledged revenue stream's sensitivity to both city and state economic conditions, given the constitutional distribution of state aid is based on Detroit's population, and the total amount of state aid available for distribution is based on statewide sales tax collections," said Standard & Poor's credit analyst Jane Ridley.
