Where will the next major municipal bond default occur? While there are several definitions of default, Learn Bonds likes the one used by the major credit rating agencies. A default is when bondholders don’t receive their money (interest or principal) on time. This year there have been several headline grabbing municipal bond defaults occurring Stockton, Harrisburg, and Jefferson County. Stockton, a city in California, in February 2012 decided to default on $2 Million in payments to bondholders. Harrisburg, Pennsylvania in March 2012 defaulted on $5 Million in payments to bondholders. Last but not least is Jefferson County, Alabama which defaulted on a $15 Million payment in April. What do these three defaults have in common? In terms of geography, nothing. Each default occurred in a separate part of the country: west coast, north east and south east. But is there an area of the country where we are more likely to see a default of a city, county or school district? In order to find out, my first call was to the rating agencies. I contacted all three of the major agencies and asked them which state had the most municipal issuers rated below investment grade. Moody’s was able to quickly provide me an answer. New Jersey and Michigan currently have 4 municipal issuers rated below investment grade. As I am a New Yorker, my interest was peaked by New Jersey, the fictional home of Tony Soprano and the actual home of Governor Chris Christie. (It should be noted, that since my initial request Moody’s has upgraded Collingswood from non-investment grade to investment-grade. So technically, New Jersey is not the worst.) I thought it would be interesting to examine the particular details of how a couple of these New Jersey municipalities got into trouble. Were there any overarching themes or was each its …