CHICAGO — Fitch Ratings put Wayne County, Mich.'s already junk-bond ratings on negative watch late Thursday, hours after the county's top official warned that it could be broke by next summer.
Analysts said a
The move affects $191 million of limited-tax general obligation bonds and $262 million of Wayne County Building Authority bonds, all of which are rated BB-minus. The negative outlook also applies to the county's implied unlimited-tax GO rating of BB.
The county altogether has roughly $730 million of LTGO bonds.
The ratings action follows Evans' Thursday press conference, in which he highlighted a new audit from Ernst & Young warning that the projected 2015 deficit is larger than previously expected and that the county could run out of cash by August 2016.
Fitch also noted that Evans said bankruptcy is an option but not likely at this point.
"Additionally the county has retained a 'Chief Restructuring Officer,' which raises concerns about the county's commitment to full and timely debt repayment," Fitch analyst Arlene Bohner wrote in a brief comment on the negative watch.
The ratings firm plans to review the Ernst & Young audit and also meet with county officials in the near future, Bohner said.
Typically Fitch's ratings watches have a six-month time frame, but in an email Bohner said she expects this one to be resolved more quickly, likely within a month.
