*UPDATE 7/8/2013: It's interesting that the $56 and $61 GOs are insured by Syncora, the $66 GO is insured by AMBAC, and the $32 COP is insured by FGIC. According to Bloomberg News (via Crains Detroit) on June 13, 2013 (emphasis mine),
John Miller, co-head of fixed income at Nuveen in Chicago, said he's comfortable holding uninsured Detroit general obligations, some of which have seen yields rise to a record 16 percent.
The uninsured bonds "are speculation about the ability of the emergency manager to succeed with what he's charged with doing," Miller said by telephone. He cited the state's emergency-manager law, which calls for full repayment of the scheduled debt service on all muni debt. No Michigan locality has had to seek Chapter 9 bankruptcy protection.
So why are Detroit's insured GO bonds selling off? (Or what was the point of owning insured bonds in the first place?) There should have been a better way to hedge Detroit GO bonds anyway using exchange traded derivatives, even for retail investors. Here's a chart of the GO bond trading at $61.
|4.625 % Fixed Unlimited Tax Detroit G.O. Bond Maturing on 04/01/2022 (FINRA/Morningstar)|
Kevyn Orrs' plan for paying bondholders could cost Michigan cities (Detroit Free Press)
S&P cuts ratings on Detroit water, sewer bonds to junk (Reuters)
S&P Junks $6B of Detroit Water and Sewer Debt (Bond Buyer)
Detroit water and sewer bond rating cut to junk status (Detroit Free Press)
Orr files suit against insurer, says it is blocking deal with Detroit's creditors (Detroit News)
Detroit Sues Bond Insurer Amid Effort to Reach Deal With Creditors (WSJ)
Detroit Sues Financial Insurer Syncora to Release Improperly Captured City Casino Revenues (WSJ)
Detroit sues bond insurer over blocked creditor talks (Reuters)
Stephen Henderson: Kevyn Orr to load bankers in a bus, show them Detroit's worst neighborhoods (Detroit Free Press)
Retirees’ Medical Bills Are Bringing Down Detroit (Bloomberg View)
Detroit pushes 2013 muni bond defaults up to $6.96 bln-newsletter (Reuters)
Distress in Detroit: A BlackRock Analysis (BlackRock)
Previous posts on the D's restrucutring:
Distressed Detroit GO Bonds are Trading at 33 and 77 Cents on the Dollar (Muni Bond Price Charts)
Detroit Defaults on Pension COP Debt, Kevyn Orr's Restructuring Proposal (Unsecured GO Bonds = Employment Liabilities in Restructuring, GO Bonds Downgraded on Bankruptcy Risk)