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Wednesday, May 19, 2010

PA borrows $1 billion, cheap, for roads, prisons

"A little good news. You can all cheer up," says Gov. Ed Rendell. "We just got word from the market that PA today completed a $1 billion bond sale that was the nation's largest competitively bid bond sale since the markets collapsed in 2008," and Pennsylvania's "lowest interest rate ever for any non-refinancing deal, a combined 3.13 percent for the two deals. It establishes, one, what (Wall) Street and the market thinks of Pennsylvania's stability, and two, the power of the (federally-subsidized) Build America Bonds program."

The money will be used for "bridges, prisons, to send orders to Pennsylvania factories," Rendell told reporters. "Tell the Attorney General," he added, noting that the AG, Republican gubernatorial candidate Tom Corbett, has been bad-mouthing Pennsylvania's financial status.

Bloomberg BusinessWeek called it "the biggest competitive sale of municipal debt in almost two years, as yields on such notes reach seven-week lows." In sum, "the commonwealth offered $548.9 million of Build America Bonds, which were awarded to Bank of America Merrill Lynch at a so-called true interest cost of 3.33 percent after the 35 percent interest rebate from the U.S. government provided under the program. The $451.1 million tax-exempt portion was awarded to JPMorgan Chase & Co. at a true interest cost of 2.51 percent."

Despite Rendell's cheerful statement, Bloomberg added, "Pennsylvania’s bonds have a negative outlook at Moody’s Investors Service and Fitch Ratings, which cite the commonwealth’s declining fund balances as tax collections fall. Tax revenue in April totaled $390 million, or 12 percent below projections, according to the state Revenue Department. The shortage expanded the state’s budget gap to almost $1 billion... Pennsylvania’s notes are rated Aa1 by Moody’s and AA+ by Fitch, the second highest grade, and one level lower, AA, by Standard & Poor’s."
Posted by Joseph N. DiStefano @ 4:54 PM  Permalink | 3 comments
Comments   
  • Comment removed.
  • 0 like this / 0 don't   •   Posted 8:20 AM, 05/20/2010
    building prisons, wonder what the ROI is on that
    — dreinterests
  • 0 like this / 0 don't   •   Posted 3:28 PM, 05/23/2010
    First of all, as someone who regularly observes the comments of the neanderthal republican underclass for the crime stories posted on philly.com, lock them up and throw away the key is a top 2 contender, along with fry em, hang em or shoot em. So building a prison would be cause for applause for that crowd. Apparently not. Fixing roads, hmmm, I wonder where the money will come from to pay back the oh so demanding lender. I know, could it be the unconscionably high taxes we pay? The taxes that are railed against as much as crime? That is where we get the money to pay back the loans. Also,extra revenue from the improved wheels of commerce that get to drive over pot holeless roads and bridges to somewhere that do not collapse. It is always a pleasure to explain how the real world works to the right wing bible crowd, too busy praying and working to notice what is going on, unless its black or gay.
    — Fernando08


3 comments
About Joseph N. DiStefano
Joseph N. DiStefano writes this blog to feed his PhillyDeals column in the Philadelphia Inquirer. Joe has been a member of Bloomberg LP’s New York Finance Team, wrote the book “Comcasted,” taught writing at St. Joseph’s University, and studied economics and history at Penn. Reach Joe at 215-854-5194 and JoeD@phillynews.com
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