Savings Experiment: Snow Removal
The Money Man Behind Rick Santorum: Who Is Foster S. Friess?One bright spot occurred late Wednesday in the credit markets. California increased the amount of bonds/short-term notes the state had planned to sell to avoid a cash shortage, after bond demand proved to be solid, Bloomberg News reported Thursday.
California State Treasurer Bill Lockyer said he's increasing the note sale by $500 million to $4.5 billion while also lowering the yield range, or interest rate, to a maximum of 4.25%, Bloomberg News reported.
'I wish they all could be California...bonds'
California is the largest borrower in the municipal bond market and no small barometer of lending and economic activity. If ranked as a country, California would have the ninth largest economy in the world as ranked by GDP.
Economist David H. Wang told BloggingStocks Thursday the solid demand for California's bonds should be viewed as incremental progress in public officials' efforts to unfreeze credit markets.
"Although we are not seeing a great deal of downward improvement in the LIBOR, California's debt attracted considerable demand, which is a good sign. It shows that investors are stepping up to the plate when they see a good bond risk/return, which is the essence of the bond and credit markets," Wang said. "I think we'll now see other issuers and municipalities offer their bonds, knowing that interests rate, while higher than last year, are tolerable."
Credit Market/Economic Analysis: Another step toward financial system health, and we'll take it. As economist Wang noted, hopefully the California float will encourage other institutions to re-deploy some of that mound of cash that's been sitting in their (electronic) mattresses.
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