States And Municipalities Are Increasing Layoffs As Borrowing In The Municipal Bond Marketplace Is Reported As Frozen Over
Monday, October 20, 2008 7:22:44 AM
Jeremy R. Cooke of Bloomberg on October 15, 2008 reported: "U.S. state and local government bonds fell, propelling an almost uninterrupted monthlong decline that’s pushed long-term tax-exempt yields to the highest on record versus Treasuries and quashed most borrowing. Yields on top-rated general obligation bonds due in 30 years rose 8 bps to 5.99% today, almost 180 bps more than the taxable federal benchmark ... ‘It’s surreal,’ said Tom Boylen, managing director and municipal bond trader at BMO Capital Markets ... Municipal borrowers delayed or canceled more than 200 planned debt offerings totaling at least $13 billion since mid-September. Issuers pressing forward with deals to raise needed funding… are offering long-term yields above 6% to attract buyers."
Michael McDonald of Bloomberg on October 14, 2008 reported: "At least 21 states and the District of Columbia face a combined $8.9 billion budget shortfall as income and sales taxes decline amid rising unemployment, according to the Center on Budget and Policy Priorities. ‘Basically their revenues are not coming in as expected, and so they’re facing shortfalls,’ said Elizabeth C. McNichol…who wrote the report with Iris J. Lav."
Michael Quint of Bloomberg reported on October 17, 2008 that: "New York plans to turn to the bond market to finance an electronic slot machine parlor at Aqueduct Race Track and collect a $370 million up-front payment from the facility operator to narrow the state’s $1.2 billion deficit."
Michael B. Marois of Bloomberg reported on October 16, 2008 that "California sold $5 billion of short- term notes to avert a cash shortage after taking record orders from individual investors this week following a sales pitch featuring Governor Arnold Schwarzenegger. State Treasurer Bill Lockyer added $1 billion to the size of the initial offering after individual investors bought more than $3.9 billion of notes. Lockyer also was able to reduce the yields on the two-part sale, which remained as much as 0.88 percentage point above what California paid last year."
The MSN Finance chart of municipal bond debt for the period of September 11, 2008 to October 17, 2008 for the debt ETFs MUB, CMF, and the mutual bond funds OROHX, ORMIX and FDMMX.