No wonder those haven't actually been issued.
....A person at Lehman Brothers, which headed an underwriting group that won the bonds in the competitive sale...
Let me translate for you. Lehman Brothers competed with other investment bankers to buy the bonds for a certain price. Leham Brothers intends to make money doing this. They usually will buy the bonds at a slight discount (tax exempt bonds are not suppose to exceed 2% issuance costs) and then sell at face value, if there are no changes in the interest rates from when the pricing date. If the bonds take a long time to sell, Lehman brothers is "at risk for swings in the market." Investment bankers don't like to be at risk. They like bonds to sell out quickly. The next bond sale, unless California makes the bonds a lot more "desirable to the market" (read that higher cost to California), investment bankers will want a greater profit margin on the sale. This means that California will either pay more to investment bankers or California will pay more to investors or California will pay more to both. I have been there working with investment bankers and financial planners figuring out different ways to make the bonds either more attractive to investors or more attractive to the investment banker.
This is not good news for California. This is going to be a wake up call. What will be interesting will be to see what is said after the first round of spin to cover up the problem. I would speculate that there are going to be some very serious meetings between the state and investment bankers. I would also anticipate that you will shortly hear about leaders from the state and the legislature going on a bond investor tour to financial centers to tell folks that California will honor its debts and that California has a plan to solve all its financial problems and that the plan looks like...... Then on the otherhand, that would mean folks would commit themselves to tax increses in an election year! This is going to get interesting. It is also going to be fun to see how the politicians talk to wall street through one side of their mouth and deny it while on the stump running for office with the general public.
See my reply #11 about what will happen when these if you will pardon the expression, when these real doggie power bonds come on the market.
Watch and see how much of these bonds will be bought by CalPers and the various Unions in Kaliland. The deals to sell these stupid bonds will be brutal behind closed liberal doors.
I will be sending emails to PIMCO, Vanguard and Fidelity that if they buy any of these bonds, we will be cashing in all of our bond funds with them, that end up buying any power bond funds. Watch Met West closely, since they hired Goron for several million $'s year to do nothing. A big contributor to Clinton is in this type of business selling inner city housing loans to retirement plans.