U.S. Bankruptcy Judge Christopher Klein has surprised the bond market by ruling that the California Public Employee’s Retirement System (CalPERS) doesn’t have any special rights as a bond holder in the City of Stockton’s bankruptcy proceeding, even though California law explicitly says that it does. “The implication for municipal bondholders – and for bond insurers such as Assured Guaranty Ltd. (NYSE:AGO), MBIA Inc. (NYSE:MBI) and Ambac Financial Group, Inc. (NASDAQ:AMBC) by extension – is the prospect of enhanced recoveries in future restructurings,” writes BTIG analyst Mark Palmer. “Bondholders would no longer have to settle for carving up the value that remained…
Comments are closed.