Karen's Feed
Nov 19, 2013

Detroit could pay higher loan rate, unsealed letter shows

By Tom Hals and Karen Pierog

(Reuters) – Detroit could end up paying almost twice as much in interest as previously disclosed on a $350 million loan arranged by Barclays Capital, according to a fee letter made public on Monday after a judge ordered it unsealed last week.

U.S. Judge Steven Rhodes on Thursday thwarted efforts to keep the cost of a debtor-in-possession (DIP) financing under wraps, noting the so-called fee letter was subject to Michigan’s Freedom of Information Act.

Nov 8, 2013

Bond insurers sue Detroit over October 1 bond default

By Karen Pierog

(Reuters) – Two insurance companies that guaranteed payments on Detroit’s voter-approved general obligation bonds sued the city in U.S. Bankruptcy Court on Friday over its October 1 default on $9.37 million in payments due to bondholders.

National Public Finance Guarantee Corp, the public finance subsidiary of MBIA Inc, and Assured Guaranty Municipal Corp claimed that Detroit’s use of property taxes levied exclusively to pay off the bonds for operating expenses violated Michigan law.

Oct 22, 2013

Analysis: No answers for Chicago’s pension ills as mayor prepares budget

CHICAGO (Reuters) – When Mayor Rahm Emanuel delivers Chicago’s 2014 budget address on Wednesday, he will lay out plans for tackling a $340 million deficit, but a bigger problem barreling down on the city will have to wait – a state-mandated jump of about $600 million in pension payments starting in 2015.

During 2 -1/2 years in office, Emanuel has slashed a deficit that stood at $635 million. He has cut jobs and costs. But on the city’s pension problems, which are a municipal woe that compounds Illinois’ statewide morass, he has made virtually no progress.

Oct 8, 2013

Pension reform in Illinois? Not so fast

CHICAGO, Oct 8 (Reuters) – The would-be architects of a
grand bargain to solve Illinois’ $100 billion pension crisis
have not met as a group for three months, and the state’s last
chance to strike a deal this year is slipping away.

A super-committee of legislators charged in June with
charting a way out of the worst pension crisis among states is
bickering over savings, while some of its members ramp up
election campaigns. A six-day legislative session, the last of
2013, is two weeks away.

Sep 26, 2013

Illinois judge overrules governor, says lawmakers must be paid

CHICAGO, Sept 26 (Reuters) – An Illinois judge on Thursday
overruled Governor Pat Quinn, who had suspended the salaries of
state legislators, and ordered the lawmakers to receive back pay
with interest.

Quinn, a Democrat, suspended paychecks for the state
legislators this summer, saying they had failed to resolve a
financial crisis worsened by the ballooning cost of state
pension plans.

Sep 12, 2013

U.S. cigarette makers lose disputes with nine states in tobacco deal

By Karen Freifeld and Karen Pierog

(Reuters) – U.S. cigarette makers lost a bid to reduce payments to nine states that were part of a landmark 1998 tobacco settlement, an arbitration panel ruled on Wednesday.

The tobacco companies argued that at least 15 states had failed to diligently collect escrow payments from manufacturers that did not sign the 1998 agreement. That failure entitled participating manufacturers to lower payments.

Sep 7, 2013

Chicago mayor may still seek airport deal after talks called off

CHICAGO (Reuters) – A day after calling an abrupt halt to a bidding process for privatization of Midway Airport, Chicago Mayor Rahm Emanuel on Friday sent signals that he still would like to pursue a deal in the future.

Emanuel late Thursday halted the city’s efforts to privatize operations of Chicago’s second-largest airport after one bidding consortium pulled out, leaving the city with only one prospective bidder.

Sep 6, 2013

Chicago mayor halts Midway Airport lease talks after bidder backs out

CHICAGO, Sept 5 (Reuters) – Chicago Mayor Rahm Emanuel on
Thursday put the brakes on a deal to lease the city’s Midway
Airport because one of the two bidders dropped out, a
spokeswoman for the mayor said.

The two infrastructure investment consortia that entered
talks with the city about a possible lease of Chicago’s
second-largest airport included one combining Macquarie Group
Ltd and Ferrovial SA and the other combining
Industry Funds Management and Manchester Airport Group Plc.

Sep 3, 2013

Detroit defends contested swaps deal as key to city’s survival

DETROIT, Sept 3 (Reuters) – Detroit had no choice but to
strike a deal with holders of interest-rate swaps contracts as
the city scrambled to guarantee access to cash in the days
before its bankruptcy filing, according to depositions by the
city’s emergency manager and a key financial adviser.

The city has asked the federal judge overseeing its historic
municipal bankruptcy filing to approve the deal with Merrill
Lynch and UBS AG, which would allow Detroit to end the swaps at
a discount and give it unfettered access to casino tax revenue.
The casino money served as collateral for the swaps contracts.

Aug 14, 2013

Pension woes hit trading in Chicago’s bonds

CHICAGO, Aug 14 (Reuters) – Chicago bond prices are falling
in the U.S. municipal bond market as investors fret about the
city’s growing public pension burden.

Trades of certain Chicago general obligation bonds this week
have pushed the city’s so-called credit spread over Municipal
Market Data’s benchmark yield scale for triple-A-rated debt to
more than 190 basis points in the intermediate maturity range
from levels around 160 basis points.