Stockton's Bankruptcy

A judge is allowing the Chapter 9 bankruptcy filing by Stockton, Ca., to proceed. Stockton is the largest U.S. city to ever file for bankruptcy protection. Capital market creditors, who opposed Stockton's bankruptcy, disagree with Stockton's plan to fully fund the city's pension plan. The bankruptcy is being closely followed by municipal bond market participants and other municipalities as it appears Stockton will break with the long standing tradition of fully repaying principal to creditors in a municipal bankruptcy.