Philadelphia had hoped to sell nearly $400 million in new and refinanced general-obligation bonds last month. But after Federal Reserve chairman Ben Bernanke threatened to stop his massive purchase of federal government debt, provoking investors to dump muni funds on fear of lower rates, the city rescheduled..
New municipal bond issues, which had been pricing at roughly the same near-record low rates as U.S. Treasuries, suddenly rose to as much as 0.6 percentage points -- a big gap, with today’s low rates -- according to data posted by Municipal Market Adviser.
So Philadelphia postponed its borrowing until this coming Friday, hoping rates would slip back down. That started to happen -- until Detroit surprised investors by declaring bankruptcy, driving bond yields almost as high as June’s peak. On Thursday, city finance chief Rob DuBow said at least part of the bond sale would be postponed again.