With pundits predicting a "wave of bankruptcies" in the municipal market this year, experts say one thing should be kept in mind: the majority of distressed issuers undergoing the Chapter 9 process don't end up stiffing bondholders.

Dreadful images conjured up by all the talk of bankruptcy stem from what often happens in the corporate world when a company goes bankrupt. Corporate bondholders routinely take huge losses and it's not uncommon for companies to liquidate their holdings at fire-sale prices, distributing the losses far and wide.

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