Inquiring minds want to know who would be stoopid enough to invest in California bonds?
California on Monday kicks off about $14 billion of debt sales, hoping that investor desire for yield will outweigh concerns over the US state’s fiscal trouble in a weak market for local government debt.
Yield or return of principal. The smart money will be buying these bonds at a discount when they come due…
Orders begin on Monday for a $10 billion, two-part sale of so-called revenue anticipation notes (Rans), an annual event that allows California to bridge the gap to its tax season in the spring. The notes, due in May and June, are targeted mostly at individual investors who benefit from tax breaks on so-called “munis.”
The stoopid money is buying now.
