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Investment Watch

August 18, 1996

California municipal bond defaults totaled $36 million in the first half of 1996, which means this year is on track to nearly match the record $74 million of defaults in 1994, according to the California Municipal Bond Advisor newsletter in Palm Springs. But that bad news needs some perspective: We're talking about just four issuers defaulting so far this year (meaning they have missed interest payments to bond owners), and the $36 million is a pittance compared with the $130 billion in muni bonds outstanding from all California state and local government issuers. Despite the severity of California's recession in recent years, relatively few muni issuers have had problems dire enough to cause missed payments.

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