Let S be a symmetric operator with defect index (1,1) in a Pontryagin space
H. The Krein formula establishes a bijective correspondence between the ge
neralized resolvents of S and the set of Nevanlinna functions as parameters
. We give an analogue of the Krein formula in the case that H is a degenera
ted inner product space. The set of parameters is determined by a kernel co
ndition. These results are applied to some classical interpolation problems
with singular data.