Detroit's bankruptcy last month has sent ripples through the $3.7-trillion municipal bond market, but so far the fallout seems limited to communities in Michigan.
If debt-ridden municipalities begin walking away from their financial obligations the way homeowners once did, such strategic defaults could wreak havoc for municipal bond holders.
U.S. households hold half of all municipal bonds issued by cities and states in the U.S. But over the course of the past year, those investors have been backing away. Why?