DETROIT--The city of Detroit has reached a settlement with another group of bondholders, likely reducing the number of creditors to oppose the city's bankruptcy plan at a trial scheduled for this summer.

Terms of the settlement weren't immediately released. The deal was worked out between Detroit's emergency manager and two principals that either hold or insure the majority of limited-tax general obligation bonds issued by the city, according to a statement on Friday from the federal mediators in the bankruptcy case.

"The settlement recognizes the unique status and niche of LTGOs in the municipal finance market," the mediators said. "The insurer of the LTGOs has made clear it will honor its insurance commitments on the existing policies."

According to the latest version of the city's debt-cutting plan filed in April, the city of Detroit owed about $547 million in principal and interest on these LTGO bonds.

Compared with unlimited-tax general obligations bonds, these limited-tax bonds aren't usually backed by a specific tax-revenue stream, prompting the city to argue that it could offer a much lower payout for those bondholders in bankruptcy. But bondholders opposed the cut as unfair, warning it could roil the municipal-bond market in Michigan and potentially drive up borrowing costs for municipalities.

Detroit's plan to exit bankruptcy--the nation's largest Chapter 9 case with an estimated $18 billion in long-term obligations--originally called for a different treatment for the city's bondholders. Unlimited-tax general obligation bondholders who reached an agreement with the city in April are to receive about 74 cents on the dollar in recovery on their claim under the plan. But limited tax general obligation bondholders who were still at odds with the city would only get between 10 to 13 cents on the dollar.

It was unclear on Friday whether the agreement would boost the recovery for these bondholders and by how much.

The mediation team led by U.S. District Judge Gerald Rosen added that "with this settlement, only a few remaining, albeit significant, disputes remain" between the city and its creditors. A trial has been scheduled for mid-August on the merits of the city's debt-cutting plan.

A spokesman for Detroit Emergency Manager Kevyn Orr said he didn't have an immediate comment about the deal, which mediators said was still being completed. Several bondholder groups didn't immediately return a request for comment Friday.