A little local difficulty

10 May 2011 By Agnes Crane

Bad press and stressed state finances hammered local government debt last year, but the $3 trln market was never in as bad shape as the doomsayers made out. Still, today’s improving market, helped by the Fed, isn’t immune to stumbles as dysfunctional states tackle budget woes.

This content is for Subscribers only

To access full Breakingviews.com content you must be a subscriber. Please use the following link to request a trial.

Context News

Municipal bond yields have fallen in 2011 as lower Treasury yields and a falloff in debt issuance have helped the market recover. The average 10year yield on AAA municipal debt is down 13 percent to 2.7 percent while 30year yields have dropped 5 percent to 4.45 percent, according to Thomson Reuters Municipal Market Data.

Municipal bond issuance yeartodate has reached only $66.7 billion, down sharply from the $141.9 billion seen during the same period in 2010, according to Thomson Reuters data.

Of the 50 states, 46 start their fiscal year on July 1, according to the National Association of State Budget Officers. Florida's legislature passed a $70 billion budget on May 7 by slashing spending on public education and social services and cutting taxes. California Governor Jerry Brown will revamp his budget proposal after Republican lawmakers balked at extending tax increases into the next fiscal year. Brown will unveil his new proposal to cut a $15 billion budget gap on May 16.

Search the Archive

A little local difficulty

This content is for Subscribers only

Email a friend

Please complete the form below.

A little local difficulty

This content is for Subscribers only

Existing Users Log In

Email a friend

Please complete the form below.