CHICAGO — Bankrupt Detroit would shave about $65 million of its costs to terminate interest-rate swaps that hedge its pension certificates under a new settlement agreement reached Tuesday with its bank counterparties.

The original settlement called for a roughly 75-cent-on-the-dollar payout — totaling about $230 million — to counterparties USB AG and Merrill Lynch Capital Services Inc. to terminate the swaps that have contributed heavily to the city's fiscal woes.

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