The two largest public pension funds in the United States are both reportedly in California: the California Public Employees Retirement Fund and the California State Teachers' Retirement System. Together they hold $415,000,000,000.00 or $415 Billion in assets. They also both "already guarantee municipal issues through letters of credit." No wonder then, that the Treasurer of California is encouraging both funds to take the next step and form their own Bond Insurance Company as an alternative and a competitor to the high Premiums charged by private Bond Insurance Companies, it is reported by Josh P. Hamilton & Christine Richard, "Callifornia Rebuffs Buffett's New Muni Bond Insurer (Update 1)" (Bloomberg.com, Friday, March 28, 2008).
To say again what has previously been posted in this space, it is also reported in the linked news article that Corporate Bonds defaulted at much higher 10-year rates than so-called Munis or Municipal Bonds. Yet, inexplicably perhaps, the credit rating corporations reportedly rate the credit much lower for Munis than for Corporate Bonds. This development, too, has previously been commented on here and many issuers of Municipal Bonds are wondering why the credit raters are allowed to treat them differently from Corporate Bonds, so much so that the parties which issue Munis are forced to purchase commercially available Bond Insurance in order for the credit raters to rate their credit high enough for investors to invest in Munis. Josh P. Hamilton, "California May Wage Proxy Battle to Alter S&P Ratings (Update 2)" (Bloomberg.com, Thursday, March 27, 2008).
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