That's a reasonable take for private businesses, and it would reflect poorly on that businesses reputation, when the government does it the trust is also lost, but there's also more consequences the bigger the starting trust was. There's a reason even with low interest rates US bonds are popular, if they default the rest of your investments are likely SOL too.

The US faced similar issues previously before the federal government stepped in and outlawed states defaulting. https://en.wikipedia.org/wiki/State_defaults_in_the_United_S...