Standard & Poor's on Friday gave a thumbs up to Michigan's takeover of Detroit's finances, revising the city's credit rating outlook to "stable" from "negative."
"The appointment of an (emergency manager) allows the city to move forward in a more efficient manner, continuing to make the types of adjustments necessary to regain structural balance," S&P credit analyst Jane Hudson Ridley said in a statement.
Michigan officials on Thursday tapped Kevyn Orr, a bankruptcy attorney at law firm Jones Day, to run the state's biggest city, which has been plagued by budget deficits, a high debt load and an outdated and costly government structure.
Despite the brighter outlook, S&P kept its rating of Detroit's general obligation debt deep in junk territory at B, citing budget deficits since 2003, persistent cash-flow problems and a slew of long-term liabilities, including pension and retiree health-care costs and potential payments on interest-rate swaps.
The rating agency also pointed to Detroit's steep population decline that has depressed its revenue collections and monthly unemployment rates that have topped 20 percent.
"We are pleased to hear that the steps being taken to work with Detroit and return the city to firm financial footing are being recognized," said Terry Stanton, spokesman for Michigan Treasurer Andy Dillon.
There was no immediate reaction to the outlook change from Detroit Mayor Dave Bing.