Stockton on Wednesday provided an initial outline of what a "bankruptcy budget" might look like for the city of 292,000 as a June 25 deadline for mediation talks with bond holders, employee unions and others approaches. The city proposes to stop payments on much of its debt and impose wage and benefit cuts including the elimination of all retiree healthcare benefits after a one-year transition period...I tried to find some music to go with Stockton, like I did when San Berdoo went bust, but apparently Stockton is even less song-worthy than San Berdoo. So, what about Orianthi doing a suitably generic version of "The Thrill is Gone" instead?
The municipal bond market is all but resigned to a Stockton default - the city has already skipped some payments while it negotiates - and ratings agencies continue to downgrade various bond issues. Stockton has more than $700 million in debt across its various agencies.
Moody's since February has cut its issuer rating for Stockton to a junk level Ba2 from Baa1. Standard and Poor's Ratings Service over the same period has dropped its issuer rating on the city from BB to SD, one notch above its D default rating.
Tuesday, April 2, 2013
Time to Invest In Munies?
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