Troubled California begins $14bn bond sale

This is going to be quite interesting. I have to wonder if the Fed will be a or the buyer. The rate will tell the story. If it the rate is reasonable then it is illogical. If it is illogical then QE has started to bail out states.

Jim

Exactly. If reward, or the discounting of price, does not reflect the inherent risks, then intervention must be suspected.

California on Monday kicks off about $14bn of debt sales, hoping that investor desire for yield will outweigh concerns over the US state’s fiscal trouble in a weak market for local government debt.

The Golden State is the starkest example of the financial difficulty facing US local governments. Worries are mounting of a possible rise in defaults or a reassessment of risk in the $2,800bn municipal bond market, hitherto perceived as a safe place to invest.

Source: ft.com