Detroit, Monoline Insurers In ‘All Or Nothing’ Lawsuit

Detroit and monoline bond insurance companies are waiting for a ruling on whether the city’s general obligation bonds (GOs) are secured or unsecured obligations, and the decision seems to hang on how the judge chooses to interpret the word ‘pledge’.

Detroit pledged to pay back the GOs with special taxes whose proceeds could only be deposited into an earmarked bond repayment account, and could only be used for that purpose. The municipality has argued that the pledge doesn’t hold now that it has declared bankruptcy.

Ruling will affect future GO bonds

Detroit currently plans to pay back secured debt in...