The price of protecting municipal bonds against default is dropping by an unprecedented amount, signaling that investors are separating Puerto Rico’s economic woes from a broader fiscal rebound by states and localities.
China’s first default is prompting investors to discriminate against privately-owned companies, boosting demand for local government bonds even as the central bank warns of the dangers of a $2.9 trillion pile of debt.
Four companies pulled domestic bond sales and yields on speculative-grade debt jumped the most since November after Shanghai Chaori Energy Science & Technology Co. warned of what would be China’s first onshore default.
Default insurance on Greek debt won’t be paid out, the International Swaps & Derivatives Association said after it was asked to rule whether part of the nation’s $170 billion bailout was a credit event.
The singling out of three debt types most at risk by the People’s Bank of China has prompted Nomura Holdings Inc. to warn that rising borrowing costs will make it even harder to avoid a default by these issuers.