percentage point decline: The extra return that investors demanded on nine-year city bonds backed by an unlimited tax pledge dropped 0.75 percentage point last week to the narrowest since June. That compares with a 0.03 percentage point decline for benchmark muni yields, according to Business Week. If the recovery is 74 percent in what has been one of the worst municipal bankruptcies, that should give some people in the market more comfort, said Dillon, a managing director in Purchase, New York. Safety Questioned Detroits proposed 74 cent recovery rate on general-obligation debt, almost five times more than its last offer, has sent yields to the lowest in 10 months and signals a broader rally in local government securities. Emergency Manager Kevyn Orr had proposed giving investors in debt with unlimited tax backing from the bankrupt city the same 15 cents on the dollar he offered those holding limited bonds. The deal announced last week compares with an average of 65 percent on defaulted bonds from 1970 to 2012, according to Moodys Investors Service data. The outcome should renew the view of general obligations as sacrosanct, said John Dillon at Morgan Stanley Wealth Management.
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