Detroit skips trust payment, triggers certificate payment shortfall

By Caroline Salls

Pittsburgh, June 17 - The City of Detroit is in default on a contract administration agreement related to its Retirement Systems Funding Trust 2005 series 2005-A certificates of participation after failing to make a June 14 payment on its funding trust receivables obligations, according to a notice to certificateholders from trustee and contract administrator U.S. Bank NA.

Because of the city's failure to make the required funding trust receivables payment, the trustee said there are insufficient funds in the trust to make scheduled principal and interest payments on the certificates. The total amount of the funding shortfall is $35.27 million.

U.S. Bank said Syncora Guarantee Inc. sent a payment to the trustee to fund the June 15 payments for the certificates it guarantees, but Financial Guaranty Insurance Corp. did not provide payment to fund the certificates its guarantees.

As a result, a total of $23.11 million in principal and $1.2 million in interest was scheduled to be paid on the Syncora-guaranteed certificates on June 17.

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