Detroit and bond insurers make a deal

|By:, SA News Editor

The agreement with Assured Guaranty (AGO +2.2%), Ambac (AMBC +1.2%), and National Public Finance (MBI +1.8%) is an important one as - in what would have been a precedent-setting move - Detroit had asked a court to treat its general-obligation debt as unsecured and allow a recovery of just a few cents on the dollar, while treating debt owed to pensions

Instead, $287.5M of $388M of debt in question will be reinstated at par, and the remaining paper will be assigned to establishing an income stabilization fund for the city's "most vulnerable retirees."

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