|
horgad
1000+ Penny Miser Member
USA
1641 Posts |
 Posted - 02/22/2008 : 14:18:20
|
Has anybody else been following this? I never even knew there was such a thing as an Auction-Rate Debt Market until a couple of weeks ago. In a nutshell the interest rates on the debt is set at auction every so often and the market collapsed causing interest rates on some municipal debts (schools, airports, ports, etc) to jump basically overnight from 5%-6% to 10%-20%. This is causing a scramble as organizations try to refinance using non auction-rate debt.
"Yesterday's 641 auctions of publicly offered bonds resulted in 395 failures, or 62 percent"
"Just 44 failures were recorded between 1984, when the market was created, and the end of last year"
You must be logged in to see this link.
Very scary stuff. IMHO
In addition, with the collapse the tax base of cities are in doubt so it is getting harder for a city to get a good rate.
|
|
Strange Things in the Auction-Rate Debt Market
Forum Locked
