September 12, 2013 / 3:22 PM / in 4 years

Moody's sees smaller recovery rates in muni defaults

Sept 12 (Reuters) - Investors holding defaulted municipal bonds sold by Alabama’s Jefferson County and other local governments will recover less than the average 80 cents on the dollar of recent decades, Moody’s Investors Service said on Thursday.

“After historically being extremely high, recoveries in future local government defaults are likely to be closer to the lower ones experienced in the corporate sector,” Moody’s said in a commentary.

Moody’s also said local government defaults will remain rare.

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