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A Few Thoughts on Detroit

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July 22, 2013 – Comments (2)

I decided to read up on the Detroit bankruptcy over the weekend and came up with a few thoughts on how it might impact the municipal bond market.

The losses on Detroit securities aren't likely to have much market impact, but how those losses get spread across the creditors and possible changes in percieved risk have the potential to shake things up a bit.

Fool on!

Russ

2 Comments – Post Your Own

#1) On July 23, 2013 at 12:15 AM, awallejr (83.77) wrote:

Actually it might create a buying opportunity. 

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#2) On July 23, 2013 at 6:56 PM, Mega (99.96) wrote:

I was hoping for panic in AGO and MBI shares, but no such luck.

The insured Detroit bonds may not be trading low enough. In Birmingham, the insurers successfully stuck bondholders with 20% or more losses on supposedly fully insured bonds.

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