
10-06-2010, 04:46 AM
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Mary Pat Campbell
SOA
AAA
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Join Date: Nov 2003
Location: NY
Studying for duolingo and coursera
Favorite beer: Murphy's Irish Stout
Posts: 86,063
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http://www.bloomberg.com/news/2010-1...-overseas.html
Quote:
Illinois capital-markets director John Sinsheimer and Citigroup Inc. bankers took a globe-girdling trip from the U.K. to China in June to persuade investors that the state’s $900 million of Build America Bonds were a bargain.
The seven-country visit worked. The state sold one-fifth of the federally subsidized securities abroad the next month, tapping investors who are the fastest-growing source of borrowed cash for U.S. municipalities. Illinois, with the lowest credit rating of any state from Moody’s Investors Service, dangled yields higher than Mexico, which defaulted on debt in 1982, and Portugal, which costs more to insure against missed payments.
“U.S. states are among the cheapest sovereign credits in the world,” said Patrick Brett, a Citigroup banker who marketed the Illinois securities overseas. “You’re actually picking up a good amount of spread for arguably better credits relative to equivalently rated corporates and sovereigns.”
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Illinois turned overseas amid financial strains at home. With California, it has the lowest credit rating of any state from Moody’s, which put $25 billion of general-obligation bonds on negative outlook on Sept. 23. That indicates Moody’s may again cut the state’s A1 rating, the fifth-highest grade, after a one-level reduction June 4.
The state’s budget deficit almost tripled in 2009 to $7.7 billion, Moody’s said. Its pension fund had assets to cover just 50.6 percent of promised benefits last year, the lowest so- called funded ratio of any state in data compiled by Bloomberg.
Going abroad saved Illinois about $30 million because of appetite for its debt there, said Sinsheimer, the capital- markets director, based on where final yields were set compared with initial expectations. The state paid a top yield of 7.35 percent on the 25-year debt in the July sale, more than the 20- year yield of Peru, which didn’t exceed 7.1 percent in the month.
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Other states/munis show up in that article... NY, CA, of course.
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