Municipal Bond Market Crash II
You were warned... while many are cheering about the white collar welfare bail out of...
greedy realtors, banks, flippers & McMansion owners with FHA, FHLMC & FNMA jumbo loans.... called the "economic stimulus bill"...
which will not stop the impending economic malaise and wind up costing the taxpayer hundreds of billions...
Remember, we Nattered many a time before about what would happen if the debt guarantors and the debt got downgraded...
its happening as the short term and muni bond markets are now collapsing...
and instead of getting a $300 check, the taxpayer is about to start paying in spades.
According to Tal Heppenstall, UPMC's treasurer...
The University of Pittsburgh Medical Center plans to redeem $430 million of its bonds to stem as much as $500,000 a week in losses.
Buyers at last week's auctions for UPMC debt bid just less than the 18 percent penalty rate set for the hospital's bonds.
On Feb. 14, $41 million in UPMC securities, which previously sold for a yield of 3.5 percent, were bid at 17.23 percent.
"It's outrageous, We're a AA rated credit. We don't need to get financing from loan sharks."
On Feb. 15, the Children's Hospital of Philadelphia notified bondholders that it intended
to convert $170 million of debt insured by MBIA with rates that surged as high as 10.05 percent.
St. Louis based BJC Health System yesterday filed notice that it intends to refund or convert $243.6 million of auction- rate debt insured by FGIC Corp.
Rates on the debt have increased as high as 11.99 percent.
Auction-rate bonds are long-term debt with interest rates that reset according to bids submitted through securities firms every seven, 28 or 35 days.
Until the past two weeks, bankers who ran auctions prevented failures by purchasing bonds for their own account, though they weren't required to do so.
When there aren't enough bids, the auction fails, and the rate is set at a level spelled out in bond documents
and investors are left holding bonds they expected to sell.
In the week of Feb. 11-15, 28 of New York's 43 auctions failed to attract enough bids,
including all the auctions on Feb. 14 and Feb. 15. Across the U.S., more than 100 auctions failed.
New York state taxpayers' weekly borrowing costs increased $2.3 million after banks failed to attract bidders to auction-rate bonds and stopped buying unwanted securities.
Interest rates on Dormitory Authority bonds sold for the City University of New York rose to as high as 6.26 percent last week from 3.42 percent on Feb. 6,
Buffalo's rate on water system revenue bonds soared to 11 percent from 3.30 percent.
Bonds issued by the Museum of Modern Art climbed to 4.47 percent on Feb. 13 from 3 percent at the end of January.
New York's interest-rate swaps haven't shielded it from rising auction rates as intended.
The floating rate the state receives has declined to 2.02 percent from 2.99 percent Dec. 31, while the floating rates on auction bonds have increased.
New York, with $4 billion of auction debt, may convert the bonds to a fixed rate or a different type of variable-rate security.
greedy realtors, banks, flippers & McMansion owners with FHA, FHLMC & FNMA jumbo loans.... called the "economic stimulus bill"...
which will not stop the impending economic malaise and wind up costing the taxpayer hundreds of billions...
Remember, we Nattered many a time before about what would happen if the debt guarantors and the debt got downgraded...
its happening as the short term and muni bond markets are now collapsing...
and instead of getting a $300 check, the taxpayer is about to start paying in spades.
According to Tal Heppenstall, UPMC's treasurer...
The University of Pittsburgh Medical Center plans to redeem $430 million of its bonds to stem as much as $500,000 a week in losses.
Buyers at last week's auctions for UPMC debt bid just less than the 18 percent penalty rate set for the hospital's bonds.
On Feb. 14, $41 million in UPMC securities, which previously sold for a yield of 3.5 percent, were bid at 17.23 percent.
"It's outrageous, We're a AA rated credit. We don't need to get financing from loan sharks."
On Feb. 15, the Children's Hospital of Philadelphia notified bondholders that it intended
to convert $170 million of debt insured by MBIA with rates that surged as high as 10.05 percent.
St. Louis based BJC Health System yesterday filed notice that it intends to refund or convert $243.6 million of auction- rate debt insured by FGIC Corp.
Rates on the debt have increased as high as 11.99 percent.
Auction-rate bonds are long-term debt with interest rates that reset according to bids submitted through securities firms every seven, 28 or 35 days.
Until the past two weeks, bankers who ran auctions prevented failures by purchasing bonds for their own account, though they weren't required to do so.
When there aren't enough bids, the auction fails, and the rate is set at a level spelled out in bond documents
and investors are left holding bonds they expected to sell.
In the week of Feb. 11-15, 28 of New York's 43 auctions failed to attract enough bids,
including all the auctions on Feb. 14 and Feb. 15. Across the U.S., more than 100 auctions failed.
New York state taxpayers' weekly borrowing costs increased $2.3 million after banks failed to attract bidders to auction-rate bonds and stopped buying unwanted securities.
Interest rates on Dormitory Authority bonds sold for the City University of New York rose to as high as 6.26 percent last week from 3.42 percent on Feb. 6,
Buffalo's rate on water system revenue bonds soared to 11 percent from 3.30 percent.
Bonds issued by the Museum of Modern Art climbed to 4.47 percent on Feb. 13 from 3 percent at the end of January.
New York's interest-rate swaps haven't shielded it from rising auction rates as intended.
The floating rate the state receives has declined to 2.02 percent from 2.99 percent Dec. 31, while the floating rates on auction bonds have increased.
New York, with $4 billion of auction debt, may convert the bonds to a fixed rate or a different type of variable-rate security.
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