Alabama's Jefferson County yesterday closed on a $1.78 billion sewer bond deal and brought an end to what had been the biggest U.S. municipal bankruptcy before Detroit filed for court protection from creditors in July, Reuters reported yesterday. On the same day that Detroit won an eligibility ruling from a federal judge allowing its chapter 9 bankruptcy to proceed, Jefferson County declared an end to its $4.2 billion case filed on Nov. 9, 2011. A U.S. judge last month approved an unprecedented settlement between the county and creditors that locked in Wall Street losses easily topping $1 billon. The settlement also calls for 40 years of rate hikes for customers of a county sewer system at the heart of the county's financial crisis. County officials said they had closed on the $1.78 billion sale that had required tax-free interest rates of as much as 8 percent in early morning and formally exited chapter 9. The bond proceeds will pay off JPMorgan Chase and other owners of $3.1 billion of defaulted sewer debt at about 54 cents on the dollar.
