Jefferson County Finds Bond Market `very Forgiving’ Five Years After Bankruptcy

By Amanda AlbrightBloomberg

For localities worried about facing big bond-market penalties if they go bankrupt, consider Jefferson County.

The county of 659,000 people – once the largest municipality to ever seek bankruptcy protection – has sold debt several times since emerging from court protection in 2013. Carrying an investment-grade rating of AA- in May, the county completed a refinancing of its general-obligation debt by paying yields of 2.86 percent on bonds due in 2026, just about half a percentage point above top-rated debt.

“We were told our children would be destined to poverty, you were going to be the hole in the donut, you will never recuperate,” County Commissioner David Carrington said. He said the county’s bond deals have even seen strong demand from investors. “The markets are very forgiving if you have results.”Municipal-bond market analysts – and even investor Warren Buffett – have long worried that the fading stigma of bankruptcy could embolden more local governments to petition the court to cut their debts.

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