While negotiating smaller cuts than originally proposed, Detroit Emergency Manager Kevyn Orr has imposed tough financial discipline and will put the city on a sustainable post-bankruptcy course, according to a Wall Street Journal editorial today. Voter-approved unlimited general obligation bonds, which are backed by the city's "full faith and credit," will be slashed by 26 percent while unsecured "limited" general-obligation bond holders may recover just 15 percent. The haircuts ought to remind investors that no debt is risk free. Bond insurers are crying foul at Orr's suing to void $1.4 billion in certificates of participation that the city issued in 2005 to backfill its pension funds. Orr argues that the city set up "sham" agencies to issue the certificates, which exceeded its legal debt limit. Investors were either complicit in the deception or failed to do their due diligence, and now they're getting a useful lesson in the risks of doing business with scofflaws. (Registration required.)
http://online.wsj.com/news/articles/SB100014240527023048109045795098608…
Both Fox Business News and C-SPAN are scheduled to provide coverage of Kevyn Orr's keynote today at 1 p.m. from ABI's 32nd Annual Spring Meeting in Washington, D.C.! If you are not able to attend in person, be sure to tune in! ABI will also be streaming the keynote live via webcast at www.abiworld.org.