Biggest Municipal Default Since Detroit Looms in California

But that's the case in Orange County. You may recall that the county itself filed for bankruptcy protection in 1994, and now, three highways in that county that link the suburbs to business parks are on the road to default.

California's largest toll-road agency, whose revenue has trailed projections for six years, is nearing the biggest default in the $3.7 trillion municipal market since Detroit's record bankruptcy. The Foothill-Eastern Transportation Corridor Agency, which operates 39 miles of toll highways in Orange County, risks default on $2.4 billion in debt.

-- Businessweek, September 11

Bonds for those highways are rated just one step above junk.

The financial difficulties of the California tollbooth agency are part of a larger financial crisis that many American municipalities now face.

Several large municipalities have filed for bankruptcy protection:

  • Detroit, Mich., July 2013
  • San Bernardino, Calif., August 2012
  • Stockton, Calif., June 2012
  • Jefferson County, Ala., November 2011

In 2011,Harrisburg,Pa., filed a petition with the Federal Bankruptcy Court, but shortly thereafter,Pennsylvania passed a law that barred Harrisburg from Chapter 9 bankruptcy protection.

Read the entire Businessweek article here.