|View of the Detroit skyline is seen looking south up Woodward Avenue in Detroit (REBECCA COOK, REUTERS|
“We’re the comeback state in Michigan, but to be a great state we needâ€¦ Detroit on the path to being a great city again,” Snyder, a Republican, said at a press conference.
On Thursday Detroit, a former manufacturing powerhouse and cradle of the U.S. automotive industry, filed for Chapter 9 bankruptcy protection, making it the largest municipal bankruptcy in American history.
Snyder acknowledged that the bankruptcy would be seen as a new low point for the city, but said “this is the day to stabilize Detroit.”
Orr, who was appointed by Snyder in March to try to resolves the city’s financial crisis and $18.5 billion in long-term debt, addressed concerns that art works at the Detroit Art Institute or other city assets would be auctioned off to pay off creditors who have been offered pennies on the dollar.
“Right now there’s nothing for sale,” he said.
Detroit has tens of thousands of creditors and the city already faced a number of lawsuits before filing for bankruptcy and experts expect the court case could last years and cost tens of millions of dollars.
Orr acknowledged that the court battle could be protracted and difficult, saying that straight off the bat the city will “have an eligibility fight, I suspect” over his right to file bankruptcy.
News of Detroit’s bankruptcy, meanwhile, sent prices tumbling across the $3.7 trillion municipal bond market, which has been on a weak footing for weeks thanks to uncertainty about the future of the U.S. Federal Reserve’s massive stimulus program.
“Detroit is bleeding through into the general market right now,” said Domenic Vonella, an analyst at Municipal Market Data(MMD). “This is the icing on the cake.”
Yields on top-rated, 30-year general obligation bonds rose by between 5 and 9 basis points to near 4.1 percent, their highest in a month, MMD data showed.
(Reporting By Nick Carey; Additional reporting by Edward Krudy in New York; Editing by Dan Burns)