| DETROIT, Sept 10
DETROIT, Sept 10 Detroit's bankruptcy filing has
made it harder for Michigan's municipalities to tap America's
municipal bond market but it is difficult to say exactly how
much impact it has had, the state's governor said in an
"I think it's probably made it more challenging but it's
difficult to say what degree you would put on that," Republican
Governor Rick Snyder told Reuters in a phone interview while on
a trip to China to promote investment and tourism in Michigan.
"But the whole thing is it's hard to tell because there are a
number of issues in the debt markets these days. It's becoming
more challenging. Period."
Facing some $18.5 billion in long-term debt, Detroit filed
for bankruptcy on July 18. If the federal judge presiding over
the case allows the bankruptcy to proceed it would be the
largest Chapter 9 municipal bankruptcy case in U.S. history.
Kevyn Orr, the state-appointed emergency manager overseeing
the city's finances, has offered creditors pennies on the dollar
and the bankruptcy case is expected to be costly and protracted.
Since the filing in July, some in America's $3.7 trillion
municipal bond market have been wary of debt coming out of
Some local Michigan issuers have delayed planned debt sales
because of a spike in yields since, which has spooked some
In August, investors demanded and obtained a very high
interest rate on $92 million debt issued by Detroit's school
"We haven't had major pushback (from Michigan municipalities
on problems with debt issuance), we've had calls giving us
updates on how their financings are going," Snyder said. "But I
would say that it's something that we're watching and having
discussions with people on."
Earlier on Tuesday, the governor agreed to give a deposition
to creditors' lawyers ahead of the pending bankruptcy case,
after the attorney general's office had argued on his behalf
against the move citing executive privilege.
Public sector unions in particular have maintained that
Snyder and Orr colluded to push Detroit into bankruptcy in order
to strip city workers of benefits and pay, which are protected
by Michigan's constitution.
"We're just following through with the legal process and
make sure we're focused on turning Michigan around in terms of
getting better services to citizens," Snyder said. "We had a lot
of discussions and in the end we made a voluntary decision to do
Snyder also said that despite Detroit's dire financial
situation, there would be no massive injection of state aid to
resolve its problems.
"I've been very consistent on that and the state is not
going to bail out Detroit," he said. "Nor would I recommend the
federal government bail out Detroit with respect to the debt
"We have done a lot and will continue to do a lot to help
enhance the quality of services for Detroit because I think that
has lasting value," he added.
The governor has frequently run into opposition from
conservatives within his own party, especially on the
implementation of parts of Democratic U.S. President Barack
Obama's signature health care reform.
Conservatives blocked a state health care exchange designed
to allow uninsured Michigan residents to sign up for
government-subsidized health insurance as part of "Obamacare."
Instead, a federally run exchange for Michigan will take effect
on Oct 1.
"My continuing view is we could have done a better job at
the state level," Snyder said. "But I'll leave it up to the
federal government to effectively implement what they said they
were going to do."
The governor added that he would have preferred to borrow
from the experience of travel web sites Expedia and Orbitz to
set up a state-level exchange.
"That would be more user friendly and borrowing from the
private sector things that work because most of us buy our
tickets that way when we travel," he said.