Slightly more than 28 percent of Detroit’s water and sewer bonds were tendered by bondholders before Thursday’s 5 p.m. deadline, according to the municipal bond tracking service bondcompro.com. The bonds tendered totaled $1.5 billion of the $5.2 billion in outstanding water department debt.
The city offered to refinance the bonds after negotiations with bond insurers and an ad hoc committee of bondholders as part of the city’s restructuring plan to emerge from its historic bankruptcy. Originally, the city’s proposed post-bankruptcy plan of adjustment planned to cut cuts interest rates on the current water and sewer bonds, and gave the the city the option to redeem those bonds early, without paying additional compensation to bondholders.
The new plan would lower the water department’s costs and free up as much as $50 million from bond reserve funds. The city has the option to withdraw the tender offer if it feels too few bonds have been offered for refinancing under the tender offer.
Representatives of the Detroit Water and Sewerage Department couldn’t say what would happen next with the bond offer, other than to note that a special meeting of water commissioners has been set for 1 p.m. Friday.