California RAN Update: Risk Of Far Less Revenue "Anticipation" Explains Why Bond Only 59% Presold
As we reported earlier, today's $10 billion (lack of) Revenue Anticipation Notes to be issued by California has been delayed. It turns out there is more than meets the eye: namely a lawsuit, which has been disclosed only post-facto. From Dow Jones: "Lockyer issued a notice for the deal's preliminary official statement on Wednesday that said a taxpayer lawsuit was filed in state court on Tuesday seeking to block the sale of 11 state building. If the sale is not completed by June 30, fiscal year 2011 state revenue would be reduced by $1.2 billion, the notice said." In other words, there will be much less revenue to be "anticipated." As for the actual auction, unlike GM which according to Government Motors star employee of the millennium Phil Lebeau is oversubscribed so many times one needs an abacus to figure it out, only 59% of the Cali RAN was presold. In the meantime, the muni mauling continues with extra vigor and finding bid pockets has become tougher than discovering an honest banker.
Retail investors snapped up $5.89 billion, or nearly 59 percent of the offering, during a two-day presale period on Monday and Tuesday, the state treasurer's office said late on Tuesday.
"We launched this sale in some pretty rough waters," Tom Dresslar, spokesman for California Treasurer Bill Lockyer, said in a statement. "Given the market conditions, we're pleased with the retail demand."
What market conditions? The S&P is near 2010 highs. Just how much higher does Brian Sack need to get the S&P before bankrupt states can finally stop using the "Fed market manipulation is ineffective" cop out?