Detroit's Plan May Endanger Bondholders, Moody's Says

Law360, New York (May 16, 2013, 6:46 PM EDT) -- Plans to remedy Detroit's dire financial condition, which includes $15 billion in obligations and a deficit that exceeds $326 million, may portend default or bankruptcy for city bondholders, Moody's Investor Service said Thursday.

Moody's assessment reacts to a report released Monday by the city's emergency manager Kevyn Orr that detailed Detroit's prolonged crumbling finances. The credit rating provider warned Thursday that the city's recovery plan relies on hefty debt relief to “shore up its finances,” a possible prelude to default or bankruptcy, according to Moody.

“The recovery...
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