"We're on two tracks: to renegotiate or to terminate the plan and start all over," said County Manager Tony Petelos.
Both the county and its creditors, as well as hedge funds that have bought about $1 billion of Jefferson County's beaten-up debt, face rising rates that will curb the amount of bonds that can be sold, said James Schwartz, head of municipal research at BlackRock.
"When they originally structured the deal to come out of bankruptcy, they were looking at a rate environment that was much more attractive than it is today. I think they're going to have a hard time being able to maximize the recovery here," Schwartz said. "They're going to have to borrow less."
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