Why Muni Investors Aren't Sweating Over Stockton

Photograph by David Paul Morris/Bloomberg

The California city of Stockton has moved one step closer to bankruptcy, but muni investors aren’t panicking. Last night Stockton’s city council voted to skip $2 million in bond payments and, signaling more gloomy news to come, to begin negotiating with creditors as it tries to avert bankruptcy. The city, saddled with high crime and a foreclosure rate second only to Las Vegas, faces at least a $20 million budget gap.

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