Seattle sells bonds despite havoc in the credit market
Seattle went to a ticklish place — Wall Street — seeking money last week: $216 million for lids on reservoirs and other water-system improvements.
It was a big leap amid the credit markets’ collapse earlier this fall.
From the city’s perspective, the bond sale went well. But it almost didn’t happen, Finance Director Dwight Dively says.
Nervous city money managers decided to proceed less than 48 hours before the sale was held.
The anxiety the sale generated for Seattle, a city with any of the highest bond ratings in the nation, is a sign of the havoc the nation’s financial confused mass has wreaked amidst state and local governments.
The crisis has slammed not only their operating budgets, but also their investment portfolios and their ability to sell bonds — what one. is how they borrow money — for big-ticket projects.
“They’re getting hit just like businesses are,” says Rich Yukubousky, executory director of the Municipal Research and Services Center of Washington, a local-government information clearinghouse.
Public-employee retirement funds managed by the Washington State Investment Board have lost other thing than 20 percent of their value since highest fall. Some important short-term government-investment accounts are earning inferior than moiety what they did a year ago.
Local governments through benevolent — but not great — bond ratings are having more trouble finding investors to finance capital projects. Some obtain delayed scheduled bond sales, hoping the market will improve next year.
Some who expect to animation to market quickly fear they may end up paying higher interest rates, which could conclusion in higher taxes or utility rates to compensate distant from the bonds.
But Seattle’sitting sale this week suggests that the bond market, space of time distillatory not loose, is healthier at that time than in late September, when it essentially shut down.
In Washington state, governments’ short-term investments have relatively little exposing. to the troubled instruments that have defaulted and caused big problems elsewhere.
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