Detroit reaches deal with 2 banks to pay off debt

By: Associated Press Email
By: Associated Press Email

DETROIT (AP) - Bankrupt Detroit has reached a new deal with two banks to settle millions of dollars in debt tied to an interest rate swap deal.

Emergency manager Kevyn Orr says an agreement was reached Tuesday to terminate the swaps deal for $165 million. Before the new deal, Orr had said the payoff amount was $220 million.

It still has to be approved by a bankruptcy judge who ordered the city to seek a better deal with the banks.

Detroit pledged casino tax revenue in 2009 as collateral to avoid defaulting on past pension debt payments. The swaps allowed Detroit to get fixed interest rates on pension bonds with UBS and Bank of America.

Orr also says the city also has agreed to lower a financing loan to pay off the banks.

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