Politics
A First-Ever Default Shakes an $80 Billion Corner of Muni Market
Key Points
Bonds A First-Ever Default Shakes an $80 Billion Corner of Muni Market More than two decades after Wall Street started pumping out a new type of bonds — those backed by the legal-settlement payments governments receive from cigarette companies — one batch has finally been driven into a default. It almost certainly won’t be the last. The securties allowed state and local governments to get the cash upfront by selling debt that’s repaid, gradually, when the proceeds roll in.
Bonds
A First-Ever Default Shakes an $80 Billion Corner of Muni Market
More than two decades after Wall Street started pumping out a new type of bonds — those backed by the legal-settlement payments governments receive from cigarette companies — one batch has finally been driven into a default. It almost certainly won’t be the last.
The securties allowed state and local governments to get the cash upfront by selling debt that’s repaid, gradually, when the proceeds roll in. That offloaded all the risk to investors, who were compensated with high yields in return.