The downgrade announced by Moody's today isn't unexpected. In December, we narrowly averted a downgrade. Since then, we've been concerned about the continued possibility and we've worked to avoid it.
A consequence of the downgrade is its effect on our swap agreements. In 2009, when the last swap default occurred, the city and the counterparties, anticipating the possibility of a future downgrade, included a remedy in our swap agreements to allow for the conversion of the entire payment becoming due in exchange for term payments of $50 million annually over seven years.
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We have had and will continue to have discussions with swap counterparties to avert any negative financial impact.
-- Christ Brown, Detroit Mayor Dave Bing's COO