California Saved by Mom, Pop as Rates `Choke' Issuers

Discussion in 'Wall St. News' started by poyayan, Oct 17, 2008.

  1. poyayan



    "California, which has more than $45 billion of general obligation bonds, still had to pay a yield of 4.25 percent on the notes due June 22, 2009, the most on record relative to Treasuries."

    The state set the annualized tax-free interest rates on the notes at 3.75% for the seven-month issue (maturing next May 20) and 4.25% for the eight-month issue (maturing June 22).

    Those yields matched the preliminary numbers Lockyer gave on Wednesday, although on Tuesday the state had estimated that the yields could be as high as 4% on the seven-month note and 4.5% on the eight-month issue, depending on investors' response.

    Even at the low end of the state's original range the yields are juicy, because the interest is exempt from state and federal income tax. A 3.75% tax-free yield is equivalent to earning a fully taxable yield of 5.74% for someone in the 34.7% combined state and federal tax
  3. poyayan


    Yea, looks great for short term....hrm.. It is hard for me to picture California default on them given how aggressive they market this to Californians.

    You know, I can't find those short term bonds. What are their CUSIP numbers?
  4. calif bonds are rated a by fitch. this is lower than bonds issued by bank america and goldman. even countrywide bonds are rated a.

    what does that say about calif? no wonder they have to offer 6% coupons.