Michigan plan for Detroit a snub for bondholders, says Fitch

|By:, SA News Editor

The governor's plan to allocate $350M in state money for Detroit's pensions "demonstrates continued weak support for bondholder security and repayment," says Fitch. The idea pensions' claim on resources sits above that of bondholders "could establish a troubling precedent, at least in Michigan, and perhaps beyond."

Governor Snyder's plan would raise $350M to go toward's the city's retirees and his comments - that state funds would not bail out bondholders or Wall Street - "suggest an 'us vs. them' orientation to debt repayment that undermines willingness to pay public debt in Michigan."

The next payment date is April 1 when about $47.6M in principal and interest is due.

Watching with interest: MBI, AGO, AMBC.