CHICAGO — With a default looming next year on nearly $17 million of junk-rated tax-increment financing bonds issued by a development authority in Troy, Mich., the bonds’ insurer is threatening to pursue litigation or state intervention if the city does not step in to ensure the obligation is repaid.

The bonds are limited obligations of the Troy Downtown Development Authority payable solely from TIF revenue. They lack a pledge from the city of Troy, a triple-A rated municipality in top-rated rated Oakland County.

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