Philadelphia Can’t Explain Its Swaps Yet Fights Ban: Muni Credit

Philadelphia may see costs from interest-rate swap contracts climb to as much as $186 million. Yet it’s lobbying to exempt itself from a proposed Pennsylvania ban on the derivatives that would be the first in the U.S.

State Senator Mike Folmer, a Republican, in February introduced a bill that would bar publicly funded entities from engaging in the derivatives, which can be used to protect against swings in interest rates. The ban would deny Philadelphia, which had entered into $3.5 billion of swaps, access to a useful tool, said Rob Dubow, finance director of the fifth-most populous U.S. city.