For people who trade financial futures, municipal bonds have often been considered a stable investment option.
However, the recession and rising budget costs have produced shortfalls in a growing number of cities around the country, pushing some closer to the risk of bankruptcy and defaulting on their bonds.
One recent high-profile example has been Harrisburg, Pennsylvania. A recent CNBC report noted that the state’s capital currently owes about $70 million in debt payments for this year, and that there is no guarantee all of the money will be available.
CNBC also noted that the overall municipal bond market is worth $2.8 trillion, and that cities from coast to coast are struggling with shrinking revenues and higher costs. One example cited was Vallejo, California, which has been in Chapter 9 bankruptcy for about two years.
Elsewhere, a Reuters report notes that the trend of struggling municipalities is becoming especially pronounced in California, where the city of Antioch is now among those that are discussing bankruptcy. The wire service added that officials are expecting other municipalities to confront the possibility of filing for bankruptcy given the increasing fiscal problems many are facing.
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