Posted on 09/28/2002 11:42:51 AM PDT by Robert357
Edited on 04/13/2004 2:41:04 AM PDT by Jim Robinson. [history]
Rating agencies were lukewarm about the offering, assigning them tepid grades that indicate a relative degree of risk. While several notches above junk status, the bonds were nonetheless rated below California's usual debt grade.
The debt issue will be the largest in municipal bond history, in part repaying $6.5 billion in state funds and $3.5 billion in remaining bank loans that the state took out to buy power on behalf of California utilities, which were no longer able to do so because their credit had been destroyed. The rest will be used for reserves, costs and other issues.
(Excerpt) Read more at sfgate.com ...
This is perhaps the closest to the truth that one is likely to see in print from a California newspaper.
I suspect that the Gov's office has already called the paper and demanded to have certain folks fired! The Sunday business section should be an interesting read tomorrow. The business writers probably understand better than most what this is all about.
Davis folks should be hopping mad that someone dares to print the truth. Especially when it is not a pretty story.
Let's hear it for the Business Page!
The yeild on those California revenue bonds was around 6%, which is a pretty high cost of money.
They are robbing Paul to pay Peter and the future be damned.
It's completely amazing to me that it would be necessary to do that.
Maybe for the York, Nebraska Weekly Cornhusk, but not for the SF Chronicle.
Good work, nonetheless!
Oh yeah. He sold bonds that will be repaid from the tobacco money in order to balance this year's budget.
It was an editor and I suggested he team a business reporter with a political reporter to do an indepth story. I am hoping that the Suday paper will have an interesting story.
The editor told me they were thinking of doing more stories (beyond the Friday story) on this topic, but intended to wait until the bond issue official was on the street and bonds were being offered. I tried to explain that there was still a heck of a story to tell, just in what the rating agencies had said.
Anyway, the using of this money to pay off earlier debts and new costs strikes me as akin to getting a new credit card and using it to pay off the last one while running up even higher charges.
They are robbing Paul to pay Peter and the future be damned.
Why should GRAY OUT care? He has no future in Office. He will leave Simon the headache of trying to repay his bungled finances. All the while blaming Simon and the Republicans for it. Needs to be a serious campaign issue....Californias Future....How our state became an indentured servant.(Not that my state is in any better shape thanks to the damn democrooks!)
I'm sure you have noticed that the silence from the Wall Street Journal is deafening. Clearly, that rag has gone over to the dark side.
It's too bad I had to let my subscription to Investor's Business Daily lapse. Now there's a paper that is not afraid to print the truth.
Yes. He is borrowing against anticipated tobacco revenues.
He has also "borrowed" against the California Employees Retirement Fund, the State Teachers Retirement Fund, the Dentists Retirement Fund, the pop-bottle deposit fund, and the Highway Trust Fund (this last in direct violation of a people's initiative which prohibited such things.)
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I too was surprised, but I offered websites for Fitch and SW&P and tried to make things as easy as possible. Who knows, maybe somebody was looking for a story to fill space? Anyway, anytime they respond back and ask questions I will respond. I got three e-mails from the editor after my initial email and it responded to every question and provided easy to check references and made suggestions as to the significance. It was amazing.
If you purchased the guaranteed bonds, yes. If you purchased the others, it would depend on your situation. In reality, the only individuals who should buy these are wealthy Californians who can use the tax exempt income as a way to avoid state income tax. You need to be careful because of the Min alternate tax. If I lived in CA and were in the market for tax exempt bonds, I would pick something else, but that is just me. If others feel the same way the State will have to pay a premium on its interest rate or the bonds will be heavily discounted, either way the yeild will need to increase, if demand isn't strong.
The question is, "Do you have enough cash on hand to make a down payment on a California home, PLUS an amount equal to the total loan amount with which to purchase bonds."
If so, my hat's off to you, sir.
I expect that the telephone lines from Sac to SF were burning today as folks on the Gov's staff screamed at the Editorial Board of the Chronicle. It will be interesting to see what the SF Chronicle says tomorrow.
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