What if a public power authority defaults on its debt?
A public-power-authority default jolts the muni-bond market; the clean trade is wider muni and HY credit plus financials with municipal exposure. Direct rhyme is 2013 Puerto Rico's power authority (PREPA) distress and Detroit, which repriced muni risk premia. Transmission: contagion to similarly leveraged G.O./revenue issuers, higher new-issue yields. Forward angle: a single-name muni default rarely turns systemic given the market's segmentation, so size for a spread-widening, not a 2008-style freeze despite the Lehman analogue.
Every number ships with its receipt — the odds, the range, the precedents, and a public grade at Reality Check. The statistical machinery that produces it is proprietary.
The butterfly cascade
How this trigger trickles across markets, left → right — the root shock, its first‑order moves, then the ripple effects. Drag any node; tap a market for its real price history.
Resolution timeline — how this probability is moving
Our model's odds (electric blue) over time vs the market's (Polymarket, amber), from the past toward the 6–18 months horizon. Each dot is a real macro event that nudged the probability — green pushed it up, red pushed it down. Tap a dot for the source. Loading the probability audit trail…
What it would mean
If this plays out, it is a risk-off shock. A debt-laden public power authority defaults, jolting the municipal-bond market and stranding ratepayers. The trigger decomposes into signed root‑shocks — Credit spreads ▲ — which propagate through our causal graph to the markets below.