California Kicks Off $14 Billion in Bond Sales
The municipal bond market has generally been perceived a safe place to invest, but worries of possible increasing defaults and a reassessment of risk in the $2.8 trillion market are changing all that. Last week, muni bonds sold off because of these concerns and as federal subsidies, which have boosted the market, are coming to end and likely won't be extended with Republican gains in midterm elections.
Orders begin today for a $10 billion, two-part sale of so-called revenue anticipation notes due in May and June, targeted mostly at individual investors who can benefit from tax breaks on them. The success of the sale will come down to the right yield. Market expectations are for a relatively low yield of 1% to 1.5%.
On Nov. 18, the state is issuing $2 billion of Build America bonds in a sale aimed at institutions, the FT reported, and next week it will sell $1.75 billion of tax-exempt bonds.