Monday, February 22, 2010

California Debt Watch Resumed

WSJ:

NEW YORK—California, owner of the worst credit ranking among U.S. states, plans to tap bond markets for $4 billion in March to finance infrastructure improvements, a spokesman for State Treasurer Bill Lockyer said.

The sales-a pair spaced several weeks apart—would come at a time that the Golden State's budget is bleeding about $20 billion in red ink through fiscal 2011 and when some portfolio managers have cautioned that investments in California debt are turning riskier.

The state, however, is counting on a new cash-management tool that it expects to gain legislative approval Monday to put a floor under its short-term needs and to improve both market and investor confidence in the finances of the world's eighth-largest economy.

"We need a credible solution to our cash-flow situation," and this legislation will help Controller John Chiang and the Department of Finance to defer general-fund payments for specific programs and for specific time periods, if needed, in order to maintain an adequate cash cushion, Tom Dresslar, a spokesman for Mr. Lockyer, said in a telephone interview Sunday.

The program would remain in place for the balance of this fiscal year, ending June 30, and through the next fiscal year, giving the financial officials more flexibility by not having to seek legislative approval each time.
...
"California is done with financing its deficits with the issuance of bonds," Mr. Dresslar stated Sunday.

Thus endeth the nobel experiment in democracy. not with revolution but with a "cash-management tool."

7 comments:

Sweet Cashback said...

You certainly keep me watching!

Murst!

Lex said...

Are these subsidized with "Build America Bonds" (sic) money?

Remember this from last April?

A thoroughly deceitful means of public financing.

Son of Brock Landers said...

Dawg - what do you think the yield is going to have to be on these to make them edible to institutions and high rollers? what would you use for a tax rate with some of barry o's coming tax hikes? I think a top marginal bracket of 40% federal is good for starters. Even then, I think the risk is too much at any yield.

Good cheesecake streak.

getyourselfconnected said...

California will get an Uncle Sam backed muni bond guarantee but that will not help their plight long term only allow more borrowing short term.

Rob Dawg said...

4 posts a day and falling. Should i continue?

Lex said...

Whatever happened to Silver Surfer?

tj and the bear said...

4 posts a day and falling. Should i continue?

Slacker! Where's my redhead?!?