12/28/2010 08:07 am ET Updated May 25, 2011

Muni Credit: Struggling States 'Punished' By Credit Markets

The cost of credit-default swap insurance on the lowest- rated state after California has risen 16 percent to $330,000 to protect $10 million of debt, from $285,000 on Dec. 3, according to data compiled by Bloomberg. That's the most expensive since July 12, when it reached $335,000.

"They're punishing all the states but they're punishing the worst states more," said Alan Schankel, director of fixed- income research for Janney Montgomery Scott LLC, a money management firm based in Philadelphia. "Illinois has been worse for a while."

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