The deadly wildfire that left the town of Paradise, California, in ruins may become a test case for the municipal bond market.
“The situation casts doubt on whether the local government can meet over $3.5 million in annual payments to pension obligation bondholders, CalPERS and retiree healthcare plan participants,” wrote Marc Joffe, a policy analyst with the Reason Foundation. The town of 27,000 found itself in the path of the Camp Fire, a fast-moving inferno that started Thursday morning and engulfed Paradise within hours.
An estimated 80% to 90% of the town has burned, said Scott McLean, a spokesman for the California Department of Forestry and Fire Protection, the lead agency fighting the fire.