The U.S. Supreme Court has recast the nature of risk in the $3.8 trillion municipal-bond market.

The justices said Monday that they wouldn’t review a lower-court decision stemming from Puerto Rico’s bankruptcy, which held that the island’s highway agency could skip bond payments during the procedure despite the claim that investors had over some of its cash. Securities industry groups warned that the decision could cast doubt on the security of bonds backed by some pledged revenue, potentially triggering credit-rating cuts or price declines.

The court case seems to spell an about-face for the municipal market, where Detroit’s bankruptcy showed that debt backed only by a government’s promise to repay exposes investors to bigger losses than had been previously expected. Since then, governments including Chicago have sold special revenue bonds — which are backed by liens on specific revenue like sales taxes — to earn a better credit rating and lower their cost of borrowing.

“The concern is that it will bring more of a perception of risk to the market for special revenue bonds, which are a significant majority of the bonds that are issued,” said James Spiotto, managing director of Chapman Strategic Advisors and an expert on municipal bankruptcies. “This could affect ratings and affect the cost of borrowing in a negative way that hurts issuers and taxpayers.”

Fitch Ratings has already cited the initial March ruling in new guidelines on how it will rate tax-supported debt, which could affect 20 ratings. The company is moving to make the rating on the debt closer to the underlying government to account for the risk that they could skip payments on such securities during a bankruptcy. Moody’s Investors Service also cited the ruling when it downgraded four different bond issues, including those from Cleveland’s and Dallas’s water utilities.

“Because of that decision, we’ve seen other bonds get downgraded,” said Shaun Burgess, a portfolio manager at Cumberland Advisors. “It hurts how they were viewed prior to that decision and that safety that many viewed that they had.”

Bond insurer Assured Guaranty asked the Supreme Court to review the decision in September, saying that it “unsettled” the market for revenue bonds. But lawyers for Puerto Rico’s financial oversight board said the “doomsday” scenarios about the ruling haven’t happened yet and the company was exaggerating the impact of the ruling.

The National Federation of Municipal Analysts, a trade group, predicted that if the lower court ruling stood the prices of some revenue bonds would need to be cut to account for the risk. It could add anywhere from 5 to 50 basis points in yield on revenue bonds for infrastructure projects, the group said. Even a five-basis point increase would translate to $2 billion in increased costs over the next decade, according to the estimate.

Still, bankruptcies by governments remain extremely rare, which limits the reach of such precedents. Dennis Derby, a portfolio manager for Wells Fargo Asset Management, said the ruling could create buying opportunities if the prices of special-tax bonds drop as a result.

Chicago’s water utility, for example, is a major service provider within Illinois and at little risk of bankruptcy, Derby said. “When you’re looking at these types of issuers, they operate in a different environment than the issuers in Puerto Rico did,” he said.

Derby added that the low risk of bankruptcy is likely in the “near-term.” “Longer-term it’s always questionable,“ he added.

New Jersey took one step closer to broadening the rights of workers on Monday when the state Assembly passed a bill inspired by the bankruptcy of Toys “R” Us. The law would require one week’s pay for each year of employment for workers in the event of mass firings from companies with more than 100 employees. It also would extend the employee-notice period to 90 days from 60 days.

Even with a slate of big-ticket bond measures potentially heading to California voters this year, investors shouldn’t expect a wave of tax-exempt debt to flood the supply-starved market anytime soon.

That’s because California officials have been slow to tap the public purse. The state is already sitting on $33.7 billion of unsold bonds, about 20% of the $158.5 billion approved by voters since 1960, according to a financial report by the state treasurer. The reason: State officials have been focused on paying down outstanding debt and timing sales more closely to when those projects get started.

“They do tend to ask for large issuance authority, but their pace of borrowing is still tailored to a pretty stable debt service profile in relation to their budget,” said Dora Lee, vice president at Belle Haven Investments, which manages about $11 billion of municipal securities. The bond requests, when held up against the state’s prodigious economy and capital needs, “are a drop in the bucket.”

California plans to sell $1.5 billion in general-obligation bonds for school construction in the fiscal year that begins in July, roughly the same amount as the current year. Voters in March will get a chance to decide on a $15 billion school bond, a record amount. Governor Gavin Newsom said Friday that he expects the measure will pass.

Investors are particularly eager for California bonds given the need to shield income from the federal tax overhaul that limited local deductions. That has driven down yields and the borrowing costs for the state. Investors are accepting 2 basis points less in yield to own 10-year California securities than top-ranked debt, according to data compiled by Bloomberg. In 2009, they demanded a premium of as much as 1.71 percentage points.

Newsom also wants to give voters a chance in November to approve $4.75 billion in debt designed to ameliorate the effects of climate change. And backers of a state-sponsored stem-cell research agency are circulating a measure that would seek $5.5 billion in general-obligation bonds. That means voters could see more than the $9 billion in borrowing sought in 2016, the last presidential election.

California has about $81 billion in outstanding general obligation and lease revenue debt, down $5 billion from 2016, according to state treasurer reports.