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However, it is important to note that the House Natural Resources Committee responsible for drafting PROMESA clearly indicated in its section-by-section summary of the bill that the bill does not “reprioritize pension liabilities ahead of the lawful priorities or liens of bondholders as established under the territory’s constitution, laws, or other agreements.” This provision was included to avoid a repeat of the costly mistakes made in Detroit, where pension reform was shunted aside and the city simply got out of its financial morass by forcing bondholders to take a disproportionate share of the losses, often out of line with the city’s legal debt hierarchy.

To this day, Detroit cannot access the municipal lending market on traditional terms.