Why Detroit Won't Open A 'Floodgate' Of Municipal Bankruptcies

Last Friday was a great day for Detroit, according to Cate Long, after a Federal judge approved the city’s bankruptcy exit plan.

“It looks like the judge will sign off on this pretty quickly, and then Detroit can get to the business of implementing their new financial structure,” she said.

Long is a former municipal bonds blogger for Reuters and the founder of Puerto Rico Clearinghouse, a research and analysis resource for bondholders. She recently joined Benzinga’s #PreMarket Prep to talk about whether more cities will be filing for bankruptcy.

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The first thing Long said was that it really varies for each city, but there are a few cities in quite a bit of distress right now. Areas like Scranton, Pennsylvania, she said.

But Pennsylvania doesn’t allow cities to go into bankruptcy without the state legislature's approval, she explained.

Long said it’s up to each city to look at its own condition. While there could be more bankruptcies because of the number of cities in distressed conditions, Long said that most cities do a reasonable job of curtailing expenses and getting revenues up.

“Detroit will not open a floodgate of municipal bankruptcies,” she said.

 

 

Long also talked about other municipalities to watch after the midterm elections.

Check out her full interview here:

Don’t forget to tune in to Benzinga’s #PreMarket Prep broadcast Monday-Friday 8-9:45 a.m. ET for a live, interactive morning show with veteran traders and featured finance industry experts ready to answer your questions for the trading day.

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