CHICAGO — Want to know how many Detroit water and sewer bondholders have responded to the city's offer to tender their bonds?
You can watch the tenders coming in on a website that offers the information in real time for the first time in the municipal bond market.
The bankrupt city made the tender offer in an effort to settle with its water and sewer bondholders before a trial on its plan of confirmation.
As of late Wednesday, the amount of tendered bonds totaled $1.33 billion, out of a total of $5.18 billion.
The
It's the first time the technology has been used in the muni market, according to Bob Apfel, chairman of Bondholder Communications Group LLC, the firm that owns the technology.
"In the past, the data has been available to the dealer or the issuer, but it's never been available to the public," said Apfel, who said he used the technology to help Greece refinance $270 billion of its debt. "This is my own personal interest in making the market more efficient and eliminating the darkness which has historically been associated with the muni market but need not be," he said.
Detroit hired the firm as part of its request that holders of the revenue bonds tender their debt to allow a refinancing of the Water and Sewer Department's $5.5 billion of debt. The city is paying the firm on a per-CUSIP basis. The city launched the program on Aug. 7 and the deadline is 5 p.m. ET on Aug. 21.
The city has said it would only embark on the refinancing of the bonds if enough bondholders tender their debt. It has not said what would be a sufficient amount. It may instead consider a direct purchase of the bonds if the tender program fails.
The site allows investors to see CUSIPs, coupons, maturities, how much is outstanding, and how much is being tendered at the Depository Trust Company.
"Not all bonds are created equal," said Apfel. "The [19]97 bonds are different from the 2003 bonds, and if you own the '97 bonds, you want to know about them, and maybe look over your shoulder at the 2003 bonds."
Apfel says the technology brings transparency to the muni market, an area of rising interest to federal regulators.
The Philippines is currently using the technology for its bond tenders, he said.
"But you won't find it used in Harrisburg, Pennsylvania, or California," he said. "I truly think that Detroit and Citi [which is leading the deal] should be commended for having reached out and having all the investors be able to make their own decision, but not in darkness. It makes sense for our country. I'm quite sure this will soon be adopted by everyone, who will be shamed into doing it voluntarily."
Detroit's tender offer comes to a close as the city released its sixth amended plan of debt adjustment. The new plan incorporates the proposed settlement with the water and sewer bondholders for the first time.
