California One Step Closer To Insolvency After State Cancels $2 Billion General Obligation Bond Sale
Five days ago a great white hope appeared for the great bankrupt Golden State (Baa1/A-), in the form of $2 billion in GO bonds, which were supposed to be promptly syndicated via underwriters JPMorgan and Morgan Stanley. This would have been the first bond sale for California since November: a critical milestone as the state creeps ever closer to a full-on default. Unfortunately, the creeping just turned into a casual jog after Jane Wells (@janewells) just tweeted that California has cancelled its bond sale "after legislature fails to approve cash management flexibility bill [the] Treasurer said he needed to attract investors."And seriously, did California think it would succeed where so many other high yield issuers have recently failed?
Below is the official bond sale calendar from Lockyer's website.
So as Lockyer contemplates how to best approach DC about a bailout, here are recent California CDS levels. Pick your entry point.
Chart via Lehman Live
h/t Credit Trader