DETROIT Dec 13 The Detroit Public Lighting
Authority and Michigan Finance Authority on Friday said they
sold $60 million of bonds to jump start improvements to the
city's ailing public lighting infrastructure.
The interim borrowing, which was privately placed with
Citibank, will have a floating interest rate. Last week,
U.S. Bankruptcy Judge Steven Rhodes approved the financing plan
over the objection of some of the city's creditors.
The bond sale is the initial phase of the lighting
authority's financing plan, which calls for backing about $153
million of bonds with $12.5 million in Detroit's annual utility
tax revenue. Those bonds, which will used in part to retire the
interim debt, will be issued through the Michigan Finance
Authority in 2014.
"The closing of this transaction marks the completion of the
first step in our integrated financing and lighting system
strategy," Public Lighting Authority Director Odis Jones said in
a statement. "We can now accelerate construction of the lighting
program, a critical first step in improving these services
throughout the city."
Detroit's state-appointed emergency manager, Kevyn Orr, has
estimated that about 40 percent of the street lights in the city
do not work. Earlier this month the city was ruled bankrupt in
The Public Lighting Authority resulted from Michigan
legislation passed late last year.
In a report released on Friday, Moody's Investors Service
said Rhodes' decision to allow the bond sales was not good for
Detroit bondholders because it "increases the probability that
future operating revenues will be diverted to new creditors,
diminishing resources available to pay existing debt holders."