One of Hartford’s biggest bondholders isn’t too worried the distressed Connecticut's capital city will default on its debt, even though Moody’s Investors Service has warned that one could come as soon as next month, Bloomberg News reported yesterday. Lyle Fitterer, the head of municipal securities investments for Wells Fargo Asset Management, said in an interview that the state is likely to help pull Hartford back from the financial brink. Wells Fargo holds $40 million of Hartford general-obligation bonds, about $26 million of which is insured against default, according to Sarah Kerr, a company spokeswoman. That’s a bigger stake than any other firm that has disclosed its holdings in regulatory filings, according to data compiled by Bloomberg. The prices of Hartford bonds have tumbled since the 123,000-resident city began exploring a potential bankruptcy and credit-rating companies downgraded it deeper into junk. Its general-obligation bonds due in 2024, one of the most frequently traded securities, have traded for an average of 71 cents on the dollar this month, down from more than 100 cents as recently as April. Read more.
In related news, Connecticut cities seeking state assistance with debt payments would be prohibited from filing for bankruptcy under the latest budget proposal, the Hartford Courant reported today. In the plan, municipal leaders can apply to have the state pick up a portion of their annual debt payments, a move that is being considered in the cash-strapped capital city. A new draft of the legislation now being weighed by lawmakers shows cities would be banned from seeking bankruptcy protection if they apply for the assistance. The language appears to be aimed at Hartford Mayor Luke Bronin, who sent a letter to Gov. Dannel Malloy and legislative leaders last month threatening to file for bankruptcy if the city didn’t get additional state aid soon. Read more.
