Tuesday, June 09, 2009

more Swaps Gone Sour

Think the story of the PWSA's bond is bad? Read the details on how a school district on the other side of the state got into a similar pickle. A Pittsburgh firm mentioned in the story as connected to that deal. Some funny, but sad lines in that. Reminds me again of the Bloomberg editorial that pretty much sums up the whole mess everywhere, but with a lot of incidence in Pennsylvania: Magic, Mumbo-Jumbo Were Used to Sell Muniland Swaps.

The PWSA as some may have noticed is doing all sorts of temporary financial manuevers to deal with their situation in the hopes of finding a more permanent solution down the road. The problem is that interest rates are now going up dramatically, which is not good for anyone trying to refi debt. That situation may be going from bad to worse. Realize that the period when the financial markets were completely off-kilter has mostly passed. Plenty of activity in the muni bond market these days. So if they are still not trying to refi debt it is not because they can't. Lenders are out there. They probably just can't afford it at current rates. Where rates go in the future I dunno. But some certainly think they will be going up more and more. Time may not be helping at all.

and little noticed was a news item last week about yet another bond problem, this time at the Airport. It's different in that in this case the Airport Authority is described as 'victim'. See the Trib last week: Allegheny County Airport Authority subpoenaed in bid-rigging probe. A story that has hit the Port Authority as well. Anyone else in town impacted?

and just some more footnotes on municipal finance in town. Go read Fester on what the G20 visit could mean to police pensions in Pittsburgh.


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