Buyers of debt issued by bankrupt Detroit or junk-rated Puerto Rico are finding it pays to have bond insurance. The backing is even more valuable after upgrades of units of Assured Guaranty Ltd. and MBIA Inc.
The Northern California city of Hercules may default on $13 million it borrowed to upgrade its electrical system if bondholders don’t agree to tender the bonds at 90 percent of par value, according to the city manager.
Occidental Petroleum Corp., the oil producer planning to spin off its California business by early next year, fell the most in two months after a city in Los Angeles County imposed a moratorium on new drilling.
San Bernardino, the bankrupt Southern California city, has a tentative agreement with its biggest creditor, the California Public Employees’ Retirement System, that should help it in talks with others, the city’s lead bankruptcy attorney said.
San Bernardino, the bankrupt California city facing an inquiry by the U.S. Securities and Exchange Commission, masked its growing deficits by using funds meant for sewers, roads and construction to cover current expenses, according to city records.