Detroit bankruptcy progress

[muscleman]

Does anyone have insights into this?

http://www.mlive.com/politics/index.ssf/2014/01/fitch_ratings_michigan_gov_ric.html

 

 

[muscleman]

In the restructuring proposal, Orr formalized earlier plans to treat about $641 million of unlimited and limited tax general obligation bonds outstanding as of June 2012 as unsecured debt.Some $440 million of general obligation bonds would be considered secured debt.

 

http://www.reuters.com/article/2014/02/22/us-usa-detroit-bankruptcy-idUSBREA1K1G520140222

 

So it sounds like Orr now acknowledges GO bonds are secured debt?

[muscleman]

http://www.freep.com/article/20140408/NEWS01/304080142/Detroit-bankruptcy-breakthrough-City-hammers-out-deal-unsecured-bondholders

 

There will be something fun to watch tomorrow. I bet this is why MBI and AGO have dropped quite a bit recently.

"A source familiar with the settlement — which was negotiated by bankruptcy mediators overseen by U.S. District Chief Judge Gerald Rosen — said the unlimited-tax bondholders will be treated better than limited-tax bondholders."

 

So this implied that even unlimited GO bond probably didn't get treated as secured bond and didn't get 100% on the dollar. I would be very curious to see how much these bond insurers would drop tomorrow. :)

[yader]

Muscle, I'm new to MBI/national/"shit co". What's this all mean in easy to understand terms?

 

Thanks. 

[muscleman]

Muscle, I'm new to MBI/national/"shit co". What's this all mean in easy to understand terms?

 

Thanks.

 

http://www.reuters.com/article/2014/04/09/usa-detroit-settlement-idUSL2N0N10W220140409

 

Under the agreement with National Public Finance Guarantee Corp., a unit of MBIA Inc., Assured Guaranty Municipal Corp. ; and Ambac Assurance Corp. approximately 74 percent of the bonds would be reinstated at their current terms, equal to $287.5 million.

 

The remaining 26 percent would be assigned to establishing an income stabilization fund for the city's "most vulnerable retirees," according to the statement from the U.S. District Court for the Eastern District of Michigan.

 

This is confusing to me. They got back at least 74%. What does the terms say for the remaining 26%?

[constructive]

Muscle, I'm new to MBI/national/"shit co". What's this all mean in easy to understand terms?

 

Thanks.

 

http://www.reuters.com/article/2014/04/09/usa-detroit-settlement-idUSL2N0N10W220140409

 

Under the agreement with National Public Finance Guarantee Corp., a unit of MBIA Inc., Assured Guaranty Municipal Corp. ; and Ambac Assurance Corp. approximately 74 percent of the bonds would be reinstated at their current terms, equal to $287.5 million.

 

The remaining 26 percent would be assigned to establishing an income stabilization fund for the city's "most vulnerable retirees," according to the statement from the U.S. District Court for the Eastern District of Michigan.

 

This is confusing to me. They got back at least 74%. What does the terms say for the remaining 26%?

 

The ULTGO insurers agreed to a 26% haircut. With the money "saved" through the haircut, the city claims retirees are "better off". Although it's really just sleight of hand since the haircut is less than the bankruptcy plan, so this deal is somewhat negative for other creditors.

[muscleman]

Muscle, I'm new to MBI/national/"shit co". What's this all mean in easy to understand terms?

 

Thanks.

 

http://www.reuters.com/article/2014/04/09/usa-detroit-settlement-idUSL2N0N10W220140409

 

Under the agreement with National Public Finance Guarantee Corp., a unit of MBIA Inc., Assured Guaranty Municipal Corp. ; and Ambac Assurance Corp. approximately 74 percent of the bonds would be reinstated at their current terms, equal to $287.5 million.

 

The remaining 26 percent would be assigned to establishing an income stabilization fund for the city's "most vulnerable retirees," according to the statement from the U.S. District Court for the Eastern District of Michigan.

 

This is confusing to me. They got back at least 74%. What does the terms say for the remaining 26%?

 

The ULTGO insurers agreed to a 26% haircut. With the money "saved" through the haircut, the city claims retirees are "better off". Although it's really just sleight of hand since the haircut is less than the bankruptcy plan, so this deal is somewhat negative for other creditors.

 

Yeah. So the deal implies that UTGO bonds are more secure than limited GO, but still not as secure as the other types of secured bonds. I still wonder how Detroit would treat pensions in the deal.

Anyway, it is better than I expected. :)