Wayne County, Michigan’s debt was cut two levels by Moody’s Investors Service, which cited “ongoing financial stress.”
The Baa2 rating, two levels above non-investment grade, affects $445 million of debt that carries the county’s general-obligation limited tax pledge.
Wayne County is unlikely to eliminate its operating deficit “in a timely manner,” Moody’s said in a report, which pointed to “persistent economic challenges” facing the most populous county in Michigan.
Moody’s said unemployment and “considerable deterioration” of real-estate values challenge the county, which encompasses Detroit. The deficit has forced it to rely on issuing tax-anticipation notes to support cash flow, Moody’s said.
Moody’s also revised the outlook on the county’s rating to stable from negative, basing the decision on the expectation that officials will make progress toward eliminating the deficit.