California Bankruptcies Show Willingness Waning, Moody’s Says

Bankruptcy decisions by Stockton and San Bernardino in California signal more cities may be losing their willingness to pay debt obligations, Moody’s Investors Service said.

“The looming defaults by Stockton and San Bernardino raise the possibility that distressed municipalities -- in California and, perhaps, elsewhere -- will begin to view debt service as a discretionary budget item, and that defaults will increase,” Anne Van Praagh, a managing director at the ratings company, said in a report today.