Moody’s Investors Service this week downgraded to Ba2 from Baa3 the underlying rating on $7.9 million of outstanding school building and site improvement bonds issued by the Detroit Public Schools in 1996.

The downgrade to below investment grade comes several weeks after Michigan declared DPS to be in a state of fiscal emergency and appointed a manager to take over its finances. The district faces a $400 million deficit under a $1.1 billion annual budget.

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