TIME TO SEE WHETHER DETROIT'S BIG BET ON SHEDDING ITS DEBT PAYS OFF By Stephen Henderson February 10, 2014 Detroit Free Press Presented by Kevin Spezia.

Slides:

Advertisements

Similar presentations

Office Hours: Monday 3:00-4:00 – LUMS C85

Advertisements

Introduction to Business and Marketing Chapter 26.2.

Part 6 Financing the Enterprise © 2015 McGraw-Hill Education.

Bankruptcy & Reorganization Business Finance 335 Supplemental Material.

Laws Protecting Debtors/Creditors and Bankruptcy Unit C Basic Business Law Objective 6.02 Part D.

Problems With Credit Chapter 19.

Your rights Credit. Your rights Truth in Lending Act (1968) Ensures consumers are fully informed about cost and conditions of borrowing. Fair Credit Reporting.

Introduction to Bond Markets

BONDS MK, UNIT 16.

Chapter 16 Long-Term Debt Long-term Debt Apart from raising capital from shareholders, start-up firms may borrow money from banks. When the firms become.

13 Saving, Investment, and the Financial System. FINANCIAL INSTITUTIONS IN THE U.S. ECONOMY The financial system is made up of financial institutions.

Textbook PowerPoints = TMI Maurer’s PowerPoints = JEI.

· 1 CORPORATE FINANCIAL REPORTING 8 - Reporting Working Capital.

 2004 McGraw-Hill Ryerson Ltd. Kapoor Dlabay Hughes Ahmad Prepared by Cyndi Hornby, Fanshawe College Chapter 12 Investing in Bonds 12-1.

6-1 CHAPTER 4 Bonds and Their Valuation Key features of bonds Bond valuation Measuring yield Assessing risk.

Saving, Investment, and the Financial System

Chapter 11. The Level & Structure of Interest Rates Loanable funds market Risk Structure of Interest Rates Loanable funds market Risk Structure of Interest.

1-1 Course Overview Finance: what is it? Corporations Investors Financial Markets: Banks, Stock Exchanges Corporate Finance Money and capital marketsInvestments.

Long-Term Liabilities - Chapter 10 Financial & Managerial Accounting, 8th Edition by Needles, Powers, Crosson.

Finance Structures and Issues in the UAE Financial structure is a mixture of long–term debt and equity that a company uses to finance its operations, it’s.

©2009 The McGraw-Hill Companies, Inc. Chapter 9 Long-Term Liabilities.

An Introduction to Bonds Tina Horvath. What is a Bond? w Debt instrument: When one purchases a bond, one essentially lends an organization such as the.

Capital market Instrument: Treasury note and bonds. Federal agency debt. Municipal bonds Corporate bonds Common stock.

Credit Credit Problems & Solutions.

1 MONEY & BANKING Week 3: The behavior of Interest rates Chapter 5.

Cost of Capital Chapter 14. Key Concepts and Skills Know how to determine a firm’s cost of equity capital Know how to determine a firm’s cost of debt.

Selecting a Minimum Attractive Rate of Return Chapter 15 Mechanical Engineering 431 Engineering Economics.

Chapter 19 Problems with Credit.

Treasuries and Municipals.  US Treasury issued- default risk?  Still has interest rate market risk  Interest exempt from state and local taxes  Less.

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible.

Chapter 4: Interest Rates

Money and Fixed-Income Market Fed Funds Treasury Bills Rates and Yields Repos and Reverses Fixed-Income Securities.

Corporate Financing & Personal Investing. Terms for this chapter Bond Callable bond Common stock Convertible bond Cumulative preferred stock Diversification.

8 - 1 CHAPTER 8 Bonds and Their Valuation Key features of bonds Bond valuation Measuring yield Assessing risk.

By Ryan Barstad and Shane Morales.  Used to pay for projects when the county or city doesn’t have the funds at hand.  Bond issued by city or government.

7 - 1 Lecture Nine Raising Capital: Sources of Long Term Financing Internal Sources: Retained Earnings Depreciation External Sources: Borrowing: Bonds.

The Non-Income Determinants of Consumption and Saving

Economic Impact of Capital Level Kevin Zhang, Ph.D., FCAS CNA Insurance Companies.

Bonds and Mutual Funds.  A bond is a certificate representing a promise to pay a definite amount of money at a stated interest rate on a specified due.

UNIT C ECONOMIC FOUNDATIONS AND FINANCING 6.01 Compare records used in business.

1 Chapter 12 Budget Balance and Government Debt. 2 Budget Terms A Budget Surplus exists when Tax Revenues are greater than expenditures and is the difference.

Financial Markets and Institutions PowerPoint Slides for: By Jeff Madura Prepared by David R. Durst The University of Akron.

Harcourt Brace & Company Chapter 25 Saving, Investment and the Financial System.

© Family Economics & Financial Education – Revised October 2004 – Credit Unit –Understanding Credit Reports Funded by a grant from Take Charge America,

Phone: (800) Website: Disclaimer: We are not a law firm or attorney. However,

Filing for Bankruptcy Mr. Stasa – WE City Schools © 1.

1. What is the national debt? 2. What caused the national debt? 3. Where does the government get the money when it wants to spend more than it takes in?

1 Chapter 12 Budget Balance and Government Debt. 2 Budget Terms A Budget Surplus exists when Tax Revenues are greater than expenditures and is the difference.

Bell Ringer Activity Based on history, what has happened each time our economic system faced change?

Determination of Interest Rates

Business Law Unit 5. What is prejudgment attachment? Attachment is a court-ordered seizure and taking into custody of property prior to the securing of.

Why does the government issue bonds and securities? Raise money they need to operate the government and finance the debt Government Bonds and Securities.

Personal Finance Chapter 13

Encouraging Growth Cause: increased government spending raises output and creates jobs Cause: Tax cuts allow individuals to have more money to spend and.

Financial Institutions and Markets FIN 304 Dr. Andrew L. H. Parkes Day 8 “How do financial markets work?” 卜安吉.

Corporations. Review Advantages –Limited liability (risk) for owners –Lives on… –Can raise money for expansion Disadvantages –Double taxation Corporate.

Bankruptcy. A legal process to get out of debt when you can no longer make all your required payment.

Should We Worry About the National Debt? Economics Chapter 14.

1 Lecture 11: Risk structure of interest rate & uncertainty Mishkin Ch 6 – part A page

E. Napp Banking Today In this lesson, students will be able to identify important terms concerning banking. Students will be able to identify and/or define.

Ch. 11Financial Markets MASON EDUCATION. Table of Contents 1.Bell Journals 2.Warren Buffet Profile 3.Ch. 11 Breakdown 4.Ch. 11 Vocab 5.Big Charts Headline.

1 URBAN INFRASTRUCTURE BUSINESS CONFERENCE CASA RIO-BRAZILIAN BUSINESS EMBASSY MONDAY, MAY 30, 2016 URBAN INFRASTRUCTURE BUSINESS CONFERENCE CASA RIO-BRAZILIAN.

Financial Planning Government Bonds Corporate Bonds Bonds.

Bonds and Their Valuation Chapter 7  Assessing Risk 7-1.

9-1 Stocks Revisited Dr. M.F. Omran, CFA Features of common stock Determining common stock values Preferred stock.

Accounting Equation: Another Look Everything we have came from somewhere. Focuses on Liabilities.

Xu Che.  Bankruptcy is a legal status of a person or organization that cannot repay the debts it owes to creditors.  Liabilities exceed Assets  Negative.

Write down one costly item that you would buy right now if you had enough credit. What steps can you take now to start building and maintaining a strong.

Bonds and Their Valuation

Corporate Finance reorganization.

Presentation transcript:

TIME TO SEE WHETHER DETROIT'S BIG BET ON SHEDDING ITS DEBT PAYS OFF By Stephen Henderson February 10, 2014 Detroit Free Press Presented by Kevin Spezia

Detroit’s Debt Problem Detroit is the nation’s first major city to declare bankruptcy Has $18.5 billion in debt and other liabilities $9.3 billion in debt; $9.5 billion in pensions [4] $7 billion of secured debt [4] Currently spends 38% of revenue on debt [4] Will submit restructuring plan in bankruptcy court on Wednesday [1]

Secured vs. Unsecured Debt Secured debt is backed by borrowers’ assets For cities, this may include future tax revenues If the borrower defaults, these assets are forfeit Because of its lower risk profile, secured debt has lower interest rates

Debt Restructuring Detroit will ask to discharge much of its debt, including some secured debt More money to focus on city services No problem for unsecured debt; can be easily discharged in bankruptcy Secured debt usually cannot be discharged in bankruptcy If it can, this may set a precedent that leads to far more difficult municipal bond markets

Risk Pricing (CAPM) Risk decreases profitability in lending; an increase in risk can be thought of as similar to an increase in supplier prices. Image [3]

Sources 1. Detroit Free Press. Bomey, Nathan. “Detroit expected to file bankruptcy restructuring plan next week”. February 10, Detroit Free Press. Henderson, Stephen. “Time to see whether Detroit's big bet on shedding its debt pays off”. February 16, bankrutpcy-Kevyn-Orr-bankruptcy-plan-bondholders-debt-banks. bankrutpcy-Kevyn-Orr-bankruptcy-plan-bondholders-debt-banks 3. Econport.org. “Shifts Shown Graphically”. © 2006, Experimental Economics Center. graph.html. graph.html 4. The Huffington Post. Woods, Ashley. “A Guide To Detroit's Chapter 9 Default And How Bankruptcy Could Change The City”. July 24, bankruptcy-chapter-9_n_ html. bankruptcy-chapter-9_n_ html