Bankruptcy Judge Steven Rhodes said that he will rule on Thursday on whether to let stand a deal struck between the city of Detroit and two investment banks to end toxic interest rate swap agreements that proved to be a strain on city finances, Reuters reported yesterday. Lawyers for bond insurers, banks, pension funds and others objected to the deal during a bankruptcy court hearing yesterday, saying that the Dec. 24 deal with UBS AG and Merrill Lynch Capital Services, a unit of Bank of America Corp., was not in the best interest of the city. Detroit could have won larger concessions from the investment banks, the opponents argued. If Judge Rhodes approves the agreements, Detroit will pay the banks $165 million plus fees to end the agreements at a 43 percent discount to their original cost to the city. Detroit entered into the interest-rate swaps in a failed attempt to hedge, or limit the risk, on some of the $1.4 billion in pension debt that it sold in 2005 and 2006.
