Detroit Seeks Hedge Fund Loan To Cancel Swaps

Sep 4 2013 | 10:59am ET

Detroit is turning to hedge funds to raise some $350 million to settle swap contracts with Bank of America and UBS.

The city, the largest in American history to file for bankruptcy, asked 14 banks, hedge funds and other lenders for proposals on the debtor-in-possession financing. Most of the money, about $250 million, would be used to settle the swaps, with the rest being set aside to pay for public services, including the police, fire department and blight removal.

"These are all people we have been working with over the months and who have been wanting to make a proposal should we seek DIP financing," Bill Nowling, a spokesman for Detroit's emergency manager, told Bloomberg News.

Detroit has not identified any of the potential lenders.

The DIP financing would be backed by casino-tax revenues currently pledged to the swaps. The deal, which would see Detroit pay as little as 75% of the current value of the contracts, would fall apart without the loan, Nowling said. Cancelling the swaps would save Detroit about $50 million.


Lifestyle

Survey: Wall Street Banks Still Top Silicon Valley, Hedge Funds for Freshly-Minted MBAs

Jun 21 2016 | 9:01pm ET

Contrary to concerns that Wall Street isn't as appealing to new graduates as it...

Guest Contributor

The Future of the Blockchain in Financial Services Communications

Jun 17 2016 | 1:05pm ET

Over the past year, a large portion of the financial services industry has awakened...