I read or heard somewhere that certain states are required by their constitution to make interest payments on any munis they may issue. They would have to sell assets if they don’t have the cash. I assume this would apply to paying back the principle as well.
What’s the straightdope? And if true then which states are bound by this?
If true then this also begs the question, why would a state bond offer higher interest rates then a Treasury with the same maturity?