Replies

calgov2002:

calgov2002: for old calgov2002 articles.

calgov2002: for new calgov2002 articles.

Other Bump Lists at: Free Republic Bump List Register

Calpowercrisis:

To find all articles tagged or indexed using Calpowercrisis, click below:
	click here >>>	Calpowercrisis	<<< click here
(To view all FR Bump Lists, click here)

Tax-exempt borrowers have paid less than 2 percent since last October on adjustable-rate debt that resets yields periodically, according to a Bond Market Association index. Tax-exempt revenue bonds rated AAA based on guarantees against default yield 4.75 percent on a 20-year maturity, according to Bloomberg data.

A 4.75 percent tax-free yield translates into a taxable equivalent return of 8.53 percent for a California resident in top federal and state income tax brackets.

California's water department may pay more than other borrowers to find buyers, and to compensate them for the risks of an untested financing mechanism, according to investors. Bonds backed by the states' share of the tobacco settlement, for example, have yielded more than 6 percent.

So most folks are paying 4.75 % on tax exempt bonds, yet the California Tabaco bonds yeilded more than 6%. This is when to a highly taxed Californian, the 4.7 is the equivalent of an 8.53 taxable issue. This means that the 6% that the tabaco bonds are yeilding is equivalent to nearly 10% on a taxable basis to a high income tax bracket Californian.

The state of California is having to pay a serious premium over market! I wonder what a BBB+ will require?