Posted on 10/23/2002 4:11:39 PM PDT by Ernest_at_the_Beach
What is expected to be the biggest municipal bond sale in history is under way.
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The state of California is selling the first of the bonds to pay for electricity that it had been buying to keep the lights on in homes and businesses across the state.
Wednesday's sale of $4.25 billion of Department of Water Resources Power Supply Revenue Bonds is the initial sale of what will be the largest municipal bond issuance in history at an estimated $11.95 billion, says state Treasurer Phil Angelides.
The sale was met by strong demand from a wide range of institutional investors, he says. It comprised $3.75 billion in tax-exempt, variable rate demand bonds -- which sold within a few hours of coming to market and achieved an interest rate of 1.80 percent. All the bonds have 20-year maturities.
Another $500 million of insured auction rate bonds were also priced Wednesday morning, with an interest rate of 1.80 percent.
"This is an important day for California as this bond sale begins to repay the state for costs incurred during the power crisis," Angelides said. "We were extremely pleased with investor demand and the breadth of market interest."
The remaining $7.7 billion in Power Supply Revenue Bonds will be sold the week of Nov. 4. Those will be fixed rate, taxable and tax-exempt. Proceeds from this sale will reimburse the state's General Fund for advances made to purchase energy last year.
The Department of Water Resources began buying power on behalf of the state's three major investor-owned utilities after they were caught between skyrocketing wholesale costs and fixed retail rates during the state's energy crisis last year.
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I'll ping the list.
Memories:
California Power Crisis animations featuring Governor Gray Davis
AND......................
...to see what bad, bad things Davis has done... - CLICK HERE
calgov2002:
 calgov2002: for old calgov2002 articles. calgov2002: for new calgov2002 articles. Other Bump Lists at: Free Republic Bump List Register |
Chicago, IL --- Washington, DC --- San Francisco,CA Cheer on Bill Simon in Long Beach, CA October 24th! Dump Davi$ Rally in Pasadena, CA October 26th! Help TakeBack America! - FReePWatch 2002 |
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| ...DATE../..TIME... | ...CITY../..SITE... | ...ADDRESS..INFO... | ...MORE INFORMATION... |
| Thursday 10/24/2002 11 - 11:30 am |
Long Beach, CA | Hyatt Regency - Support Bill Simon 200 S. Pine St. - At Shoreline Drive Long Beach, CA 710 Fwy S., Follow the signs |
California Republican Gubernatorial Candidate Bill Simon speaks to the Long Beach community about California's future. Click HERE for more info about the LONG BEACH CHAMBER OF COMMERCE "California Visionaries Luncheon". Meet in front of the Hotel at 1130 or earlier. Be Creative with your signs. "FOR SALE" Gray Davis signs are always in, the bigger the better! |
| FRiday 10/25/2002 445 pm, rain or shine. |
Chicago, IL | Pre-Patriots Rally II FReep, ChicagoLand For more info, check out the Thread. |
FReePers, Gather at Michigan Ave and Jackson, 4:45pm. We will head toward Columbus Drive at about 5pm to find our targets. Bring your flags, signs and patriotism! Keep those sign ideas coming! |
| Saturday 10/26/2002 530 pm, rain or shine. |
Pasadena, CA | Dump Davi$ Rally JOIN THE CAMPAIGN CHICKEN AND THE CHICKEN TO DEBATE GOVERNOR IN PASADENA Firefighter Rally and BBQ with Gray Davis United Democratic Headquarters 1118 E. Green Street Pasadena, CA |
Bring as big a "For Sale" sign as you can muster! Please RSVP to sfrank@simonforgovernor.com if you can make it. |
| Saturday 10/26/2002 10 am to 3 pm |
Southern Cal - Burro Canyon | Liberty Belles Second Annual Belles, Bullets & Barbeque Halloween Thread Approximately 35 minutes from Los Angeles and San Bernardino Burro Canyon Shooting Park Info Directions - 11 miles north of the junction of the Foothill (210) Fwy and Azusa Ave. (Hwy 39). |
THERE WILL BE A PRIZE FOR THE BEST ANNIE OAKLEY COSTUME! Bring some food to grill, firearms if you have them, and a costume (if you dare)! Proceeds will be donated to the Burro Canyon Shooting Park cleanup operation. SPECIAL NOTE: If the road to Burro Canyon is closed, simply inform the Park Ranger that you are going to Burro Canyon Shooting Park and they will let you through. |
| Saturday 10/26/2002 11 am until 3 pm, rain or shine. |
Washington, DC | THE PATRIOTS RALLY FOR AMERICA II Original thread Update thread The Washington Monument Corner of 17th Street and Constitution Avenue, NW. C-SPAN will be striving to provide fair and balanced coverage for both the anti-war protests and the Patriots Rally. |
Bring your flags, signs and patriotism! As always, the D.C. Chapter's rules for demonstrating will be in effect. Briefly, they are: No violence, no racism, no profanity, no threats, no provocations, obey the law and treat all law enforcement officers with respect. |
| Saturday 10/26/2002 12 pm |
San Francisco, CA | West Coast Patriots Rally "Stop the Warped (Leftists)" Rally City Hall - across from the Civic Center Plaza. Carlton Goodlett Place between McAllister St. and Grove St. |
Bring your flags, signs and patriotism! Please be aware, even though there may be police there, we are each responsible for our own safety. Parking available at the Civic Center Parking Garage. BART stops a few blocks away. Cal-train + bus is also available. |
| Tuesday 10/29/2002 12pm |
New York City | Cipriani 42nd Street 110 East 42nd Street New York, NY |
New York FReePers Heads UP!!! MICHAEL EISNER, the big cheese of Disney, and his family will be honored for their contributions to Jewish Home and Hospital. Barbara Walters presides, as her friend, Elton John, that man of many events, entertains. Cipriani 42nd Street is located at 110 East 42nd Street. It is situated on the South side of the Street between Lexington Avenue & Park Avenue. A clutch of famous names - Gov. Gray Davis - native son of NY, Sens. Joseph Lieberman and Barbara Boxer, Barry Diller - will send special video tributes. |
Welcome "Drill Alaska!" You and "RightWhale" outa git tagether if'n yer in Alaska, too. Are ya?
Sure like you're "Advisory System!"
Click here for story in Wednesday's Bloomberg>
10/23 18:21
California Offers 1.8% 1st Yield on Adjustable Bonds (Update2)
By Dennis Walters
Sacramento, California, Oct. 23 (Bloomberg) -- California's $4.25 billion in adjustable-rate bonds, part of the biggest municipal sale in U.S. history, drew more orders than investment banks could fill by paying more than alternate investments.
The 1.8 percent yield on the adjustable-rate portion applies from January to March before rates begin resetting weekly and daily. The initial rate also applies to bonds that will eventually set yields through auctions every 35 days. The adjustable-rate offering sold out ``within a few hours of coming to market,'' state Treasurer Philip Angelides said in a statement.
The yield lured buyers because it's higher ``than the comparable Treasury rates'' and municipal debt with those maturities, said Todd Pardula, who oversees about $720 million in two California tax-free money market funds. Treasury bills yield about 1.67 percent for those maturities, said Pardula, who bought some of the bonds.
A 1.8 percent tax-exempt yield translates into a taxable equivalent return of 3.23 percent for a California resident in the top federal and state tax brackets.
California's Department of Water Resources sold the debt today, part of a plan to offer $11.9 billion in bonds to repay state and bank loans for energy purchases last year. The balance of fixed-rate debt is scheduled for sale during the week of November 4.
Overall Savings
The initial interest period lowered rate risk by avoiding ``really long maturities and it came at an attractive yield'' of one-tenth of a percentage point more than munis with similar maturities and guarantees, said Kevin Shaughnessy, who helps oversee $21 billion of money market investments for Charles Schwab & Co., including $6.7 billion in a California fund.
A one-tenth of a percentage point premium on today's record sale translates into $4.25 million of added annual interest expense for a borrower.
The water department is still saving money because the 1.8 percent today compares with more than 5 percent the water department has paid on its state and bank loans for water purchases. A yield reduction that large, assuming the adjustable rate stayed at that level, saves $144 million in interest expense annually compared with a 5 percent expense.
Oversubscribed
Investment banks received $5.2 billion in orders, ``a great statement of confidence by the market'' in the power plan, said Peter Hill, head of public finance at J.P. Morgan Chase & Co., which managed the adjustable-rate bonds with a Lehman Brothers Holdings Inc. unit.
A majority of orders from the more than 40 institutions that bought the debt came from California money market and bond funds, Hill said. Corporations and individual investors also bought the auction rate portion, he said.
The adjustable-rate offering was delayed by a day after PG&E Corp.'s Pacific Gas & Electric filed a lawsuit last week that questioned a plan for using utility revenue to repay the bonds. The delay allowed banks and bond insurers, which are backing the adjustable-rate debt, review the suit. The prospectus for the sale had disclosed the risk that the suit may be filed and has been amended to note the actual complaint. The adjustable-rate debt is top-rated because of the guarantees.
Utility Revenue
California's water department began buying power in January 2001 after Pacific Gas and Edison International's Southern California Edison became insolvent purchasing electricity for than state law allowed them to charge customers. A portion of revenue from those utilities and a unit of Sempra Energy will repay the bonds.
Investors said today's sale also needed a yield cushion because of concern interest rates may rise by January, lowering the value of existing bonds. One measure of tax-exempt floating- rate debt, the Bond Market Association Municipal Swap Index, rose to 1.76 percent at the latest weekly adjustment, up from 1.5 percent. It has averaged 1.42 percent over the past year.
California's budget-related notes that were sold earlier this month have been offered in the secondary market to yield 1.77 percent and they mature in June, later than today's initial interest rate period, Pardula said.
Financial Security Assurance Holdings Ltd., a unit of Belgium's Dexia SA, insured the most adjustable-rate bonds, $600 million, followed by a unit of Bank of New York Co. that provided letters of credit. The guarantees ``made the approval process quite simple'' for investors, Shaughnessy said.
`Important Day'
The $4.25 billion equals one-eight of all the adjustable-rate muni debt sold in all the U.S. during the first nine months of this year, according to Thomson Financial data. Today's sale also surpasses the biggest muni sale of $3.4 billion by the Long Island Power Authority in 1998.
The water department's sale, once planned for 13 months ago, was delayed as state regulators debated a plan for repaying the debt. The bonds are being repaid over 20 years to cushion the blow of surging wholesale-power prices in early 2001.
``This is an important day for California as this bond sale begins to repay the state for costs incurred during the power crisis,'' Angelides said.
The water department is still saving money because the 1.8 percent today compares with more than 5 percent the water department has paid on its state and bank loans for water purchases.
The rate last week was 1.74%, so maybe the PG&E suit did have a small effect. Now on the 5% figure, that was the original interest rate on the RANS, I think. But the rate was bumped up to 7.5%, then 9% [I think], when they weren't paid off on time. Sloppy reporting, as usual.
Sort of says it all. However, once in a while a reporter gets it right. There is an AP article in the Bellingham Herald this morning that ends with the following quote. It will be interesting to see how Democrats like having to act in a business-like manner. It should make them hate the day they every became involved in politics.
The PUC wants to reassure power sellers that PG&E and Edison will be able to pay their bills and persuade Wall Street to boost their credit ratings so they can rely less on the state.
Those same credit rating agencies will signal when the utilities are healthy, making it vital state regulators make consistent rules for the future, said Dominic DiMare, legislative advocate for the state Chamber of Commerce.
"It is incredibly important that there be a stable environment for the utilities and their investors, and most important for Wall Street," DiMare said. "Right now Wall Street seems to be driving the boat."
I really liked the "involved in politics," if that was the quote. The way you layed it out, that statement looked like yours, not the quote your referred to.
I don't see the California mess playing out any differently. IfWhen the blackouts re-occur, they will be blamed on Enron, FERC, and the Bush administration.
Electric rates and income taxes will rise in California, and people out there will blame the republicans.
The bill passed by a vote of 49-29. Assembly Republicans opposed the bill, which now moves to the Senate for a vote."This partisan vote sentences California rate payers to 15 years of energy bondage," said Assembly Republican Minority Leader Bill Campbell.
Be back this evening!
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