With Detroit on the brink of bankruptcy the latest workout has muni bondholders receiving less than 10 cents on the dollar. I don’t want you going near blue state muni bonds. Expect more haircuts like Detroit’s in other pension bloated cities across the country. The investing class will be an afterthought. As Matthew Dolan of The Wall Street Journal reports:
Detroit is proposing to pay unsecured lenders fewer than 10 cents on the dollar as part of a restructuring plan that would invest $1.25 billion in public safety and blight removal.
The city’s emergency manager, Kevyn Orr, said Detroit will stop making payments on billions of dollars in unsecured municipal debt starting Friday as part of a move to save cash. City employees and vendors will continue to be paid. If the debt nonpayment is viewed as a default, it could move the city a step closer to filing for Chapter 9 bankruptcy protection.