Risk in Defaults of US Municipalities On the Rise

Friday, 09 Jul 2010 01:15 PM
By: Ellen Chang

The risk of local municipalities not being able to repay their debt has risen among investors.

Some investors now fear that some local governments are facing problems coping with looming budget deficits, similar to the fate of some eurozone countries, the Financial Times reported.

Investors are eyeing the yields of US municipal bonds since they could signal a contagion of defaults in the eurozone.

“The risk in the second half of the year is that investor attention switches from Europe to the US,â€