Section 15D. An entity authorized to invest pursuant to section 15A or the legal list may invest in bond, notes or other interest-bearing obligations of the following classes:

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(i) legally issued or assumed bonds, notes or other interest-bearing obligations of a county, city, town or legally established district of the commonwealth; and

(ii) legally issued or assumed bonds, notes or other interest-bearing obligations of a county, city, town or legally established district outside of the commonwealth; provided, however, that this clause shall not authorize investments in obligations of any city or town outside of the commonwealth which have been in default for more than 120 days in the payment of any part of principal and interest of all bonds, notes or other interest-bearing obligations legal for investment under this section.

The full faith and credit of the county, city, town or district shall be pledged for the full payment of principal and interest of all bonds, notes or other interest bearing obligations legal for investment under this section.