Detroit finalizes deal with bondholders in bankruptcy negotiations
A deal with bondholders has been reached. And it is understood that with this new measures Detroit has got an inch closer in resolving its record $18 billion municipal bankruptcy. Reports have surfaced that how the company is to treat debt holders with the insurer of taxpayer-backed bonds.
The final seal is yet awaited. But those who are aware of what is going on are confirmed that things would be sorted out in a few days time with the details being put into final written form.
It was last year that Michigan's largest city had filed for bankruptcy and since then it has been on negotiating table. Those who have been approached for resolution of the issue are its biggest creditors, including unions, pension plans and some bondholders.
A few details about the agreement are yet awaited. It is not known how much the bondholders covered by yesterday's agreement would recover. The mediators said: 'The settlement recognizes the unique status and niche of the LTGOs in the municipal finance market.'
Matt Fabian, managing director of Municipal Market Advisors, a Concord, Massachusetts, research firm, said in a phone interview to a reporter: 'It's an enormous negative for general obligation bondholders to receive anything below par. It implies more risk for general obligation secured bondholders in Michigan.'
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