Muni Investors Foresee Major Defaults In 2011

chicago skyline

The majority of municipal bond investors believe that weak U.S. city governments are at a real risk of defaulting on their debt this year, according to a recent Reuters poll. 

Municipal bond analysts expressed serious concern about the financial instability of several major U.S. cities, with 14 out of 25 believing they will witness as many as four multi-billion-dollar municipal bond defaults in 2011.

Although most of those surveyed did not think any state was at risk of default, some investors noted that heavily indebted states like California and Illinois might face smaller fiscal crises that could put a drag on the overall U.S. recovery.

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