Who are muniland’s worst borrowers?
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Who are muniland’s worst borrowers?
Reuters compiled this data to determine who pays the most to borrow in muniland. Puerto Rico leads the pack again by a wide margin. The spread means that they pay 223 basis points, or 2.23 percent, more than a AAA-rated issuer to find buyers for their bonds. This follows the fundamental bond market principal that if you are more risky, you must pay more to borrow. Curiously Bloomberg reported that Rhode Island paid below market rates yesterday to issue bonds. I guess the Central Falls bankruptcy filing didn’t spook the bond market on Rhode Island issuers after all.
| Issuer | Spread | S&P rating | Moody’s rating | Debt & unfunded pensions |
| Puerto Rico | 223 | BBB (6) | Baa1 (6.5) | $ 64 B |
| Illinois | 150 | A+ (8) | A1 (8) | $ 76 B |
| California | 94 | A- (7) | A1 (8) | $ 137 B |
| Michigan | 73 | AA- (8.5) | Aa2 (9) | $ 19 B |
| Nevada | 60 | AA (9) | Aa2 (9) | $ 4 B |
| New Jersey | 50 | AA- (8.5) | Aa3 (8.5) | $ 69 B |
| D.C. | 50 | A+ (8) | Aa2 (9) | $ 5 B |
| Rhode Island | 45 | AA (9) | Aa2 (9) | $ 6 B |
| New York City | 42 | AA (9) | Aa2 (9) | $ 161 B |
| Ohio | 34 | AA+ (9.5) | Aa1 (9.5) | $ 14 B |
Source:Municipal MarketData, Moody’s Investors Service, Standard & Poor’s Ratings Services, local government budget reports, official statements (Reuters)
Public sector largess
Bloomberg had a fascinating article yesterday about the pay levels for California prison doctors. Their compensation is over 20% higher than their equivalents in the private sector. This is not the only area when public sector workers are paid high salaries — think college sports coaches. From Bloomberg:
Today a prison doctor in California can earn $248,172 a year plus overtime or extra-duty compensation. A chief physician can make as much as $265,648 plus extra pay. According to the Bureau of Labor statistics, the mean annual wage of a physician in the U.S. in 2009 was $180,870; in California, it was $191,650.
Muniland unrest
Quoted without comment from the Columbus Dispatch:
It was public discourse gone wild, a meeting that might appall a civics professor, but one that seemed to energize Mount Sterling’s angry residents.
Charges of mismanagement and ineptitude were hurled at village administrators last night. One councilwoman slammed her shoe on the table after being shouted down. And Mayor Charlie Neff, bowing to calls for his resignation, did just that — and walked out.
It all began last week with news that the village of 1,800 in southeastern Madison County would disband its police department because of deepening budget problems.
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