(Bloomberg) — Syncora Guarantee Inc. threatened to put another obstacle in the way of Detroit's efforts to cut debt through bankruptcy by saying it may oppose the city's plan to pay $85 million to end interest-rate swaps.
Syncora, which insures some Detroit bonds, derailed a previous attempt by the city to get out of the swaps contracts with UBS AG and Bank of America Corp.'s Merrill Lynch unit. A lawyer for the New York-based company told U.S. Bankruptcy Judge Steven Rhodes in Detroit yesterday that his client has reservations about the latest plan as well.
"There is a likelihood that we will object," said the attorney, Stephen C. Hackney. "We have real concerns."
Rhodes in January rejected as too costly a proposal to pay the banks $165 million to end the swaps, which have cost taxpayers about $200 million since 2009. Under an agreement announced this month, the city would pay $85 million in installments to the banks, in exchange for their endorsement of Detroit's plan to adjust $18 billion in debt.
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