Podcasts & RSS Feeds
Most Active Stories
- The Detroit Free Press endorsement shows our system of government is broken
- Scientists are looking for "survivor trees" in Michigan, and they want your help
- 8 Mile Road is eight miles from where?
- Snyder and Schauer both wrong; potential revenue lost to schools is a billion dollars a year
- Here's why so few people get flu shots
Wed December 4, 2013
Detroit's bankruptcy & the municipal bond market
The judge’s decision to let the city of Detroit pursue Chapter Nine bankruptcy protection could have an effect on the municipal bond market.
Municipal bonds have long been viewed as one of the safest investments out there. But bond holders may be among the biggest losers in Detroit’s bankruptcy.
Beth Foos is a municipal credit analyst with Morningstar. She says Tuesday’s ruling is a “watershed event” in the municipal bond market.
“With this high profile case, it’s now clear that full recovery on these investments is not a foregone conclusion,” says Foos.
But Foos does not expect Detroit’s bankruptcy will scare investors away from municipal bonds, just make them choosier.
“Investors will reemphasize the importance of understanding what the security of those investments are and the underlining credit quality of those issuers of debt before they make those investments,” says Foos.
The U-S municipal bond market is worth roughly $3.7 trillion dollars.
Politics & Culture