Monday, December 10, 2007
The Next Shoe
Right on schedule the muni bond and COP market is beginning to crack. From Financial Week we read;
The muni market’s problems, like those plaguing much of Wall Street these days, stem largely from the popping of the housing bubble. That’s threatening two major sources of government revenue—property tax collections and real estate transfer taxes—that are used to pay bondholders. Compounding matters, investor confidence has been seriously undermined by worries over the health of a handful of companies that guarantee munis, and which face crippling losses related to subprime mortgages.
The upshot of all this is that muni deals that would have flown off the shelves earlier this year are now gathering dust. Officials in municipalities across the country are wondering just how much they will have to pay to raise the cash they need as uncertainty drives up interest rates.
Gee, what's another name for investor revenue dependent upon the health of the real estate market?