Seeking more time for negotiations, Jefferson County, Alabama said it cannot pay $83.5 million towards its sewer bonds worth $3.2 billion. This Country has been looking for ways to solve its debt crisis which has pushed it towards bankruptcy.
There was an indication from creditors in Wall Street that they will consider waiving all the County’s bond payments by extending a new agreement according to Bettye Fine Collins, President of the Jefferson County Commission. A Republican, Collins also stated in an interview over telephone from Birmingham that funds were not enough to make payments towards the interest.
There was a sharp rise in the interest rates of bonds due to the ongoing financial crisis in the US following meltdown of the subprime mortgage. Following this Jefferson County including Birmingham has decided to file for bankruptcy if unable to reach an understanding with creditors including JPMorgan Chase & Co regarding bond refinancing.
This County is just one of the United State’s municipal markets worth $2.6 trillion who have suffered severe losses with some of their debt costs rising almost four times. The year 1994 saw Orange County, California suffer from bad debts and investments. After this, the Alabama County, if it seeks bankruptcy will be the biggest municipality to do so.
This County has been backed by bond insurers and banks in order to avoid payments due on its sewer bonds worth $850 million since the month of April. The rates on these bonds were adjustable and reset as and when investors could sell them.
