The LA Times has the story:
Borrowing $1.9 billion Tuesday via bonds that mature in June 2013, the state was forced to pay a 4% annualized tax-free yield to lure investors to the deal.
Just last Friday the brokerages underwriting the deal, led by Goldman Sachs, had estimated that the bonds could be sold at a yield of 3%.
4% tax free is roughly equivalent to 7.5% taxable. Sad.
7 comments:
My firstness!
With the risk of a default in a state that has no clue nor will to spend within it's budget, what would you think is a valid rate of return?
May I suggest massive government investment in a make-work project to dig a ditch all around the periphery of California. It then becomes an island and can be sold to some willing investor.
You're welcome.
NR
You mean, like Casey Serin?
Then he can complete his dream of Living on an Island, without doing anything!
Law of Attraction baby! Yesssss!
Sad? It's those damn investors who just refuse to lend. How dare they not give government E-Z credit?
This doesn't fail elegantly. I give it until February before C bonds become FedGov backed instruments. The quid pro quo for this gift will be interesting.
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