Alabama Local Borrowers Punished as Jefferson Faces Bankruptcy
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Local governments in Alabama, where thousands of highways and bridges are overdue for repairs, face higher borrowing costs for public projects as Jefferson County debates filing the nation’s biggest municipal bankruptcy.
A town that wants to borrow for road improvements or building renovations will pay about 0.2 percentage point more than one with the same credit rating in another state, even if the debt has nothing to do with Jefferson County, said Jonathan Nordstrom, a managing director at Morgan Keegan & Co., which he said is the top Alabama underwriter. If the issuer is in Jefferson County, it might be stuck with 0.8 percentage point more in regular interest rates, he said.