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Detroit Bankruptcy Judge Urges City, Bond Insurers to Seek Settlement

A federal judge on Wednesday gave Detroit and a group of bond insurance companies two or three weeks to settle a dispute over whether the city can treat certain bonds as unsecured debt, warning of an "all or nothing" ruling if no deal is reached.

By Deepa Seetharaman, Reuters, Rachel Jackson, Reuters | Updated on February 20, 2014

DETROIT (Reuters) – A federal judge on Wednesday gave Detroit and a group of bond insurance companies two or three weeks to settle a dispute over whether the city can treat certain bonds as unsecured debt, warning of an “all or nothing” ruling if no deal is reached.

The outcome of the dispute could significantly affect the $3.7 trillion municipal bond market, where general obligation bonds backed by the full faith and credit pledge of cities, school districts and others has long been considered sacrosanct.

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