S&P’s Lesser Noticed Statement “Starring” a Certain Rhode Island Town
In the perfectly justified consternation and alarm Friday following upon Standard and Poor’s downgrading of the United States’ credit rating, let’s not miss the other statement issued on the same day by S&P which hits a little closer to home. [Although the ramification of the first statement may not be remote at all.] From Reuters.
Even an anti-default state law might not prevent Central Falls, the tiny Rhode Island city forced into bankruptcy by ballooning pension costs, from defaulting on some debt, credit agency Standard & Poor’s warned Friday.
Quoting S&P directly:
Given the Chapter 9 bankruptcy filing, the prospect of full and timely payments on the General Obligation debt is uncertain, notwithstanding that, pursuant to the recently amended Rhode Island General Laws in Chapter 45-12-1, a first lien on ad valorem taxes and general fund revenues secures the bonds.