Bloomberg News

Fewer Defaults Seen by Municipal-Bond Professionals, RBC Says

October 04, 2011

Oct. 4 (Bloomberg) -- Two-thirds of municipal-finance professionals expect the number of state and local defaults will stay the same or drop compared with last year, according to a survey conducted by RBC Capital Markets.

Of 116 bankers and government officials questioned, 64 percent said they expected the number of defaults would stay the same or drop, up from 63 percent in February. Those who thought there would be fewer defaults jumped to 35 percent in September from 11 percent in February.

“The RBC survey shows that there has been a recent positive shift in the way people view the state of the municipal industry,” said Chris Hamel, head of U.S. municipal finance for Toronto-based RBC Capital Markets.

The survey was conducted at the Bond Buyer’s California Public Finance Conference Sept. 14-16.

Municipal defaults have dropped this year to about $1.1 billion, a quarter of last year’s total, according to Bank of America Merrill Lynch. Meredith Whitney, the banking analyst who correctly predicted Citigroup Inc.’s dividend cut in 2008, told the CBS “60 Minutes” show in December that the next 12 months would see “hundreds of billions of dollars” of defaults.

--Editors: Walid El-Gabry, Jerry Hart

To contact the reporter on this story: Andrea Riquier in New York at

To contact the editors responsible for this story: Mark Tannenbaum at

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