Detroit's plan for paying bondholders could cost Michigan cities

The Detroit Free Press reports:

Borrowing for Michigan cities could get more expensive in the future, if Detroit emergency manager Kevyn Orr’s restructuring plan is accepted by creditors and Chapter 9 bankruptcy is avoided, some bond experts caution. That’s because Orr’s plan would set a major precedent by treating all unsecured debt the same way — instead of giving a better payout or greater deference to general obligation bonds, sold for generations as safer investments backed by a city’s taxing authority. It’s about $530 million of Detroit’s estimated $11.5 billion in unsecured debt.

We warned people a few years ago that trouble was on the horizon.