The Michigan Finance Authority is planning to offer $92 million of short-term debt backed by state aid money for Detroit Public Schools in the first deal from an entity bearing the bankrupt city’s name.
The state is on schedule to price the securities tomorrow, Terry Stanton, spokesman for Michigan Treasurer Andy Dillon, said in an e-mail. The proceeds will help meet cash-flow deficits this fiscal year, according to offering documents.
Detroit’s state-appointed emergency manager, Kevyn Orr, filed a record municipal bankruptcy July 18 after decades of decline left the city unable to pay debts and provide services. The school district has its own emergency manager.
Standard & Poor’s rates the one-year debt SP-1, its second-highest short-term grade. The notes are an obligation only of the district and repayment is subordinate to bonds issued in 2011 and 2012.
The district and the city are “unrelated legal entities created and existing under different laws of the state,” according to the preliminary official statement. Detroit Public Schools was the fourth-biggest employer in the Motor City in 2012 with about 7,351 workers, offering documents show.
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