The recent bankruptcy filing by San Bernardino, Calif., underscores the financial stress faced by cities in the state and the potential that more might seek chapter 9 protection from their creditors, Moody's Investors Service said yesterday. San Bernardino is the third city in the state to file for bankruptcy since late June. "San Bernardino's bankruptcy is not a sign of systemic risks in the municipal market, but the filing does signal the level of distress and potential for an increase in bankruptcy filings, particularly among California cities," Moody's said in a report. "It may signal a diminution in the traditional stigma attached to bankruptcy and a shift in how cities regard the sanctity of debt service obligations."
