California is selling bonds as high as 4.5% tomorrow reports Bloomberg via The Drudge Report. Seeking cash until tax revenues start arriving next spring, Governor Schwarzenegger is even buying an undisclosed amount.
Bank of America is offering the 2 sets of notes, one due May 20, 2009 yielding 3.75 to 4.0%, and one due June 22, 2009 yielding 4.25 to 4.5%. The yield will be finalized on Thursday. Even 4.25% ain't bad for a 8 month loan, and you know California won't be nationalized. California notes have the highest possible ratings from Moody's, S&P, and Fitch.
This is a good example of why the Federal Reserve should not be setting interest rates. Buyers and sellers are perfectly capable of finding an agreeable deal by themselves. So far, less than half the notes have been sold. If the state can't sell them all, they will simply raise the rate of return to attract other buyers.
If a guy in his underwear in Reno Nevada can figure this out, what's with the boys in New York having problems? This is not rocket science.
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1 comment:
Ummm....aren't these bonds backed by ocean-view property in Palm Springs?
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