$582 million of new debt queued up for City of Portland
The City of Portland is going to the Wall Street well for another loan next week -- but this one's just a $21 million refinancing of some old Parks Bureau debt. The existing debt's pretty spendy, with interest rates of up to 5%:
The new bonds -- which are now short-term debt -- will no doubt be at lower interest rates, which is a good thing.
But for those who are waiting for the day when the city's long-term debt tops $10,000 per resident, mark your calendars for this summer. According to the sales document for the refinancing bonds, the city's going to borrow another $582 million between now and September:
The sewer bond sale, which is the real whopper in the package, has been pushed back to the summer from a previous plan to have it go off in the spring. The sewer debt tends to have a crummier bond rating than the parks bonds, and it will no doubt be long-term, which means that it will certainly be a lot spendier in terms of interest costs.
| Posted at 7:29 AM | Permalink |
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Comments (12)
$10K/resident = 1 May for over/under.
We really need some kind of celebration since we're joining the big boy cities then.
Posted by Steve | April 1, 2010 8:14 AM
When Sam was head of BES a few years back, he refinanced BES 20/25 year bonds to 40/50 year bonds for a lower cost per year but longer pay back time and more cost to ratepayer. He was hoping for 100 year bonds as is done in Europe, lower cost, but nice financial burden on great- grandchildren. Thank you elected officials.
Posted by Gary C. | April 1, 2010 8:29 AM
How might one go about "shorting" Portland (or any city, for that matter)? Are there credit-default swaps for municipal bonds?
I know there are Oregon-specific muni bond mutual funds out there, but I want to cover all my bases and see some upside whether the city goes bankrupt or limps through somehow. If the city is going to take a pound of flesh from me and my grandkids through escalating taxes and exorbitant utility fees, I might as well try to get an ounce or two back.
Posted by Eric | April 1, 2010 9:08 AM
Wasn't the debt per person about $5,000 a year ago?
Am I correct that the debt has doubled in a year? or am I just imagining things?
Posted by portland native | April 1, 2010 9:12 AM
The following is from an Economist article on Harrisburg, PA which is very seriously considering declaring bankruptcy. Note the total debt per person:
"Thanks to an irresponsible city council, Harrisburg is still stuck with a budget that does nothing to address its enormous debt burden, reckoned at $670m. It will have to make lay-offs, as well as sell assets.... Little wonder then that debt per head in Harrisburg is $9,522: three times what it is in Philadelphia, the next-highest in the state."
Posted by Snards | April 1, 2010 9:20 AM
Will all the money your city spends, do you actually see any results?
Posted by mp97303 | April 1, 2010 9:29 AM
On the topic of municipal bond-age, Matt Taibbi has a great expose up in the new Rolling Stone about exploitative bond deals put together by the same banks who ruined the housing market. Link is here.
Posted by Matt | April 1, 2010 1:10 PM
If the city declares bankruptcy will they go after the citizens? I don’t think most of Portland’s residents can cough up ten grand on a whim. Can you imagine then everyone declaring bankruptcy, all 550 thousand of us? Now that would really be weird.
Posted by John Benton | April 1, 2010 3:45 PM
"about exploitative bond deals put together by the same banks"
It doesn't hurt when low-IQ govt officials throw money at really bad ideas to make all this possible.
Posted by Steve | April 1, 2010 3:57 PM
Let's crank up the birth rate!
Posted by Allan L. | April 1, 2010 5:50 PM
Eric --- You can short sell Portland Muni bonds. The margin requirement is very low, but you have to pay interest, so the holding costs are steep.
Posted by Bob W | April 1, 2010 7:59 PM
It might also be mentioned that muni bond interest rates are generally increasing and the ratings are generally going lower as more public agencies get into financial straits.
Posted by Dave A. | April 2, 2010 7:37 AM