A Michigan county’s decision to postpone a $53 million bond sale highlights the difficulty fiscally strapped issuers everywhere may face in the wake of Detroit’s record bankruptcy filing, the Wall Street Journal reported today. Portfolio managers say that they are more cautious now about buying bonds from local governments in Michigan and may demand higher interest rates to lend them cash. Genesee County, Mich., on Thursday shelved an offering after potential buyers wanted much higher yields than the county was willing to pay. But some also say their leeriness extends beyond the state’s borders, to other local governments struggling with their finances in the wake of the recession. One key test comes in the coming week, when Puerto Rico’s electric and power authority plans to sell about $600 million in debt. The deal is the first from an issuer in the commonwealth this year as the island continues to struggle with a sluggish economy and a high unemployment rate.
