California's Muni Bond Disease spreads to Washington State !
obviously this has HUGE implications for every US state that continues to run a deficit, and must fund that deficit spending via the sale of new muni bonds.
(snip)"economicedge, Tuesday, October 13, 2009
Bond (Debt) Disease Spreads to Washington State…
Under pressure and after witnessing California botch their latest auction, Washington State proactively reduces their bond offering knowing that higher rates are here.
The spin masters are all talking that higher interest rates are good, they are a “sign of recovery.” What they are not discussing is the MASSIVE amount of debt that needs to be rolled over and that debt levels have risen to the point that any increase in rates severely impacts the budgets of those debt holders who is nearly everyone. Muni bonds are a high risk proposition in this environment, rates WILL rise, it’s just a matter of when.
States falling short by billions of dollars is a symptom of the credit bubble and subsequent collapse. Those who believe that debt can continue to grow at the present rate are simply living in a fantasy world. Governments at all levels are way overextended, they grew as the credit bubble grew and now they must shrink but they are too slow to react. The economy will force them to shrink…
Washington Slashes Muni Offering With Investors 'Overstretched'
Oct. 13 (Bloomberg) -- Washington state will cut the size of its tax-exempt bond offering by 36 percent after borrowing costs rose from a 42-year low.
The state that is home to Microsoft Corp. will shrink a planned $875.7 million offering tomorrow to $563.9 million, said Chris McGann, a spokesman for the treasurer's office in Olympia. Washington is rated AA+ by Standard & Poor's, Aa1 by Moody’s Investors Service and AA by Fitch Ratings.
State and local government bonds extended their declines today, pushing higher benchmark yields tracked in a daily survey by Municipal Market Advisors of Concord, Massachusetts. Yields on 10-year debt rose 6 basis points, the most since June 10, to 3.16 percent. "(snip)
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