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This is an update to a post here on February 5, 2010 entitled, "Bond Insurance Still Has a Market?"
Yes, it apparently does. The State of California reportedly is set to resume issuing Municipal Bonds or "munis". California will soon issue bonds totaling $4,000,000,000.00 or $4 Billion for specifically designated "capital projects," and they are not designed for general revenue. See Tom Petruno, "Big Bond Deals Ahead: California Plans $4 Billion in Muni Sales" ("Money & Company" Blog, Los Angeles Times Online, posted Saturday, February 20, 2010). (The rollout date for the bond sale was pushed back to March 11 by the California Treasurer in order to allow more time for the California state legislature to review the plan. Romy Varghese, "California Postpones Bond Sale" p. C7, col. 4 (Wall Street Journal, Thursday, February 25, 2010), subscription required for online access.)
California's planned Muni Bond sale comes after the State of Illinois reportedly sold $1,500,000,000.00 or $1.5 Billion "in tax-free bonds". Id. This is part of what appears to be a re-emerging munis market: "State and local governments sold about $5.8 billion of fixed-rate, tax-exempt bonds this week, the most in more than a month, led by Illinois's $1.5 billion refinancing to cut interest rates on existing debt." Jeremy R. Cooke and Brendan A. McGrail, "Tax-Exempt Sales Reach 5-Week High Led by Record Illinois Issue" (Bloomberg.com, Friday, February 19, 2010).
Bond Insurance is not back to where it was, however. Bond-issuing local government authorities have limited their use of Bond Insurance considerably in the face of a near-total failure among Bond Insurance Companies. Bond Insurance is reportedly carried by "less than 10 percent of the market". Id. More a scalpel than a cleaver in the current munis market, Bond Insurance has been used "'to deepen the investor pool.'" John Sinsheimer, "director of capital markets for Illinois," quoted in id. The Illinois authorities thus selectively insured "about $500 million of its [$5.8 billion] deal with insurance against default from [a Bond Insurance Company], rated AAA by Standard & Poor's." Id.
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