Detroit Recovery Plan Threatens Muni-Market Underpinnings

You knew Detroit went bankrupt? Well given that news — This is not good for bond holders: proposed a deal last week that included skipping a $39.7 million payment on pension-obligation debt. The city is also set to default on unsecured unlimited-tax and limited-tax general-obligation bonds as it grapples with $17 billion in liabilities to avoid a record bankruptcy.

So if cities can go bankrupt and stiff the bond holders, then what? This ain’t GM.

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