Cities’ bad credit is a concern to investors
The biggest financial challenge facing most cities is not bankruptcy, but bad credit, according to a new report.
The biggest financial challenge facing most cities is not bankruptcy, but bad credit, according to a new report. Researchers for Morgan Stanley, the Wall Street financial giant, warned potential investors about the weak credit quality of many U.S. cities, according to Reuters.
The researchers said that “analysis of recent Chapter 9 filings affirms that bankruptcies may pick up somewhat, but the ongoing determination of local credit quality is a more relevant systemic risk,” according to Reuters. The ongoing risks, the researchers said, include state aid cuts to cities and declining tax revenues to local governments because of the collapse of the housing market.
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