12 key points to consider on the debt ceiling and the markets
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Would interest be paid on existing debt during a technical default?
The Treasury potentially could prioritize paying principal and interest on existing debt over other outlays to avoid a technical default. If there is a delay in the interest payment, SIFMA believes “interest will not accrue in the delayed interest payment. However, there may be a rate announced for compensation, but it will most likely not be the same as the one stated in the coupon.”