Detroit Shows Wall Street Never Loses on Bad Swaps: Muni Credit
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JPMorgan Chase & Co., the third-largest muni-bond underwriter, stood to gain more than just its share of $7.8 million in fees by helping Detroit’s water and sewer unit issue new debt after the city staved off insolvency.
The municipal department’s $659.8 million June bond sale let it pay more than $300 million to banks, including JPMorgan, to end interest-rate swap agreements while raising its borrowing cost. The utility, with 1,978 employees, plans to fire four of every five workers, while debt service has climbed to more than 40 percent of revenue, internal documents show.