Reporter Martin Braun, writing for Bloomberg News, quoted two bond fund managers as saying that the fundamental state budget problems still exist in California.
Ken Naehu, who oversees $2 billion in municipal bonds at Bel Air Investment Advisors in Los Angeles, was quoted as saying,
“There won’t be a tremendous change in perception purely because the budget has passed. The municipal market is dominated by retail investors now and those investors have been scared, have been spooked."Paul Brennan, who oversees $12 billion in muni bonds at Nuveen Asset Management in Chicago, including $1 billion in California bonds, was quoted as saying,
"Some of the budget is being balanced from either additional debt or this potential stimulus aid from Washington, that’s a one-time shot and that doesn’t solve the structural deficit."Currently California has the worst bond rating of any state in the nation. That means that it will have to pay higher interest rates to attract investors when it resumes selling bonds. The state has not sold any bonds since last June.
The Bloomberg article also reported that state Treasurer Bill Lockyer said that the state is considering offering bonds within six weeks.
Bonds are virtually the only source of cash for the state stem cell agency. Sphere: Related Content