Of course, the recovery experienced by an investor in a specific defaulted bond might be lower or higher than this average.

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Meanwhile, the city has defaulted on bond payments, leaving investors in the lurch.

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"No utility bond defaulted during the 1930s, while virtually all the railroad bonds defaulted, " he says.

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The US has never defaulted on its interest payments to bond holders, except once in the 1970s due to a technical error in delivering the bonds.

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