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United bankruptcy could lead to ratings downgrade. (News Briefs).

United Airlines' Chapter 11 bankruptcy filing could eventually lead to a credit rating downgrade on tax-exempt bonds issued for United's hub airports. Although the bankruptcy filing does not itself pose a default risk to airport bonds, Fitch Ratings pointed our that the airline's forced reorganization could put downward pressure on the bond ratings. This reorganization will likely entail service cutbacks at United hubs as the airline attempts to cut costs. Since the municipal bonds are revenue bonds, the cutback in service affects the bonds' revenue streams and therefore the risk associated with the bond. Although Fitch has not yet downgraded United airport bonds, the rating agency did place airport revenue bonds issued for San Francisco International Airport on rating watch negative. Officials at airport authorities in Denver, Washington, and Chicago have assured investors they have nothing to fear. (Source: The Bond Buyer, December 10, 2002)
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Title Annotation:United Airlines' bankruptcy could negatively impact airports' tax-exempt bonds
Publication:Government Finance Review
Article Type:Brief Article
Geographic Code:1USA
Date:Feb 1, 2003
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