Barclays aids Detroit with lifeline financing
Barclays Plc would provide the city of Detroit with up to USD350 million in debtor-in- possession financing. The move was after the city had filed for municipal bankruptcy last July. This was according to a top official from Detroit last Friday.
The aid from Barclays would be used by Detroit to fund infrastructure investments, said a Reuters report. It would also be used to terminate interest-rate swap agreements that were not beneficial for the city, said city's state-appointed emergency manager Kevyn Orr.
Detroit is the first large US city to seek debtor-in-possession financing after filing for bankruptcy last July 18. The city said that it had planned to ask for a November hearing regarding the financing which is subject to federal bankruptcy court approval. According to a Reuters report, the city had at least USD18 billion of debt and obligations and is the biggest US city to file for bankruptcy.
Around USD230 million of the financing's proceeds would be used to end swap contracts that the city had entered into with Bank of America Corp's Merrill Lynch Capital Services and UBS AG. This was in conjunction with debt sold for the public pension funds of Detroit.