Detroit bankruptcy

Detroit plans to sell $1.8 billion of water and sewer bonds Tuesday through the Michigan Finance Authority in a transaction that allows it to finance the purchase of $1.5 billion of tendered bonds and further its efforts to exit bankruptcy.

Detroit's voluntary tender program of its water and sewer revenue bonds may have provide an "optimal solution" for the market but it still represents a default, Municipal Market Advisors said Monday.

Detroit will refinance a chunk of its water and sewer debt as part of a tender offer settlement with bondholders.

Fitch Ratings said Detroit's offer to holders of $5.2 billion of water and sewer bonds to tender their debt as part of a bankruptcy settlement does not constitute a distressed debt exchange, an analysis that could bode well for ratings the planned refinancing of the debt.

Detroit has asked the federal judge in charge of its Chapter 9 to consider forcing bond insurer Syncora Guarantee to issue an apology for suggesting that federal mediators have tainted the bankruptcy process.

Detroit Public Schools will move forward with a plan to issue $111 million of state aid notes as well as an updated deficit elimination plan that calls for 10% pay cuts and the closure of up to 24 schools.

Bond insurer Syncora Guarantee challenged Detroit's settlement with its unlimited-tax general obligation bondholders in court Tuesday, arguing that it means Detroiters will continue to pay taxes on a levy that they did not approve on the original ballot.

As Detroit gears up for a key trial on its bankruptcy exit plan next week, a long-simmering dispute over $1.4 billion of certificates of participation is just starting to heat up.

The Detroit City Council has approved a series of four bond issues that include nearly $1 billion of new limited-tax GO bonds to help finance unsecured creditor settlements as part of its bankruptcy plan.

Detroit Bankruptcy Judge Steven Rhodes pushed back the start date of a trial on the city's confirmation plan by eight days to Aug. 29, noting that the city's plan to reach a settlement with its water and sewer bondholders will likely result in a newly amended confirmation plan.

Detroit asked the bankruptcy court to approve financing deals that would allow it to refinance up to $5.5 billion of water and sewer debt, providing the first glimpse of settlement details with the bondholders in the court request.

Syncora Guarantee Inc. is targeting the federal mediators who crafted the main settlement at the heart of Detroit's bankruptcy exit plan, arguing that they showed illegal and politically motivated bias toward pensioners and saving the city's art.

Detroit said a planned $300 million exit financing that key to its recovery will feature a first lien on income taxes and mature in 11 to 15 years.

Detroit launched a tender offer program for holders of $5.2 billion of water and sewer bonds Thursday night, offering tender prices that range from a high of 118 cents on the dollar to a low of 72.5 cents on the dollar as it aims for a massive refinancing that will end a months-long battle with water and sewer bondholders.

Bond insurer Syncora Guarantee Inc., Detroit's fiercest opponent in the city's bankruptcy case, said it is already gearing up for appeals process assuming the city's plan is confirmed in a trial set to start later this month.

Bankrupt Detroit has floated a plan asking holders of $5.2 billion of water and sewer bonds to tender their debt, allowing the city to refinance in an effort to achieve savings.

The Sixth Circuit Court agreed to postpone hearings on a series of appeals on the city's eligibility to enter into Chapter 9 after a group of labor creditors in the Detroit bankruptcy and the city asked for the delay.

A year after Detroit filed for bankruptcy, the city's decision to put pensioners above bondholders has created an uncertain recovery environment for the entire muni sector, according to Standard & Poor's.

The federal judge overseeing Detroit's bankruptcy has delayed by one week the key trial in the case, while the city dropped its proposal to hire a post-bankruptcy monitor and FGIC dropped its subpoena of Gov. Rick Snyder

The 6th circuit appeals court will hear oral arguments Wednesday on Syncora's appeal of a key decision in the Detroit bankruptcy, one of the insurer's five pending appeals in the case.