Coach Heels

But increasingly munis are seen as vulnerable to the same forces that have coach bags put companies and some sovereign governments in crisis. "The whole system is pretty fragile," says Brian Fraser, a partner at the law firm Richards Kibbe & Orbe LLP. "The assumption has always been that municipalitie aren't going away and that they can always raise taxes to pay debt," but that's no longer the case, he says. He noted how Jefferson County, which is teetering on bankruptcy, was unable to raise sewer rates to meet its sewer bond obligation. Adds Richard Raphael, executive managing director at Fitch Ratings: "This is the Coach Sneakers worst downturn ... and most pressured environment for municipals in decades."
Since last July, 207 municipal issuers defaulted on bonds valued at $6 billion, and that number is expected to escalate, says Matt Fabian, managing director at Municipal Market Advisors. Of the 207 defaults, the large majority involved riskier bonds that were backed coach sunglasses by land, casinos, residential developments, hotels, or specialty projects, such as Las Vegas' Monorail project, he says.
Economic recovery may be showing up in corporate earnings, but it hasn't lifted the dark cloud over big-city muncipal Coach Top Handle Pouch budgets. A survey, released this week by financial advisory firm AlixPartners LLP, found that 90% of restructuring experts polled believe a major U.S. municipality will default on its debt in 2010, which is even bigger than the 63% who said a sovereign debt default would happen.