We have been told that the increase in our baseball park bond costs are due to the recent Detroit bankruptcy.
This article is of interest in that regard. Detroit’s Bankruptcy Doesn’t Faze the Municipal Bond Market
Quoting from parts of it:
- Strange as it may seem, Detroit’s bankruptcy filing—the biggest ever for a U.S. city—doesn’t appear to have unnerved the $3.7 trillion U.S. municipal bond market.
- Localities from Washington State to Alabama to Massachusetts planned to sell $8.6 billion in debt during the first full week of August, the most since April.
Other market forces may have had an effect on bond prices since our Downtown Development Corporation decided to sell it’s bonds starting in the first week of may.
Is the Detroit issue a smoke screen being used to cover up what really happened?
Recently a blogger suggested that the delay in offering the bonds for sale was at the request of certain city council members who wanted to delay the bond issuance until after the election.
That does not make sense to me in that if I were part of the group ramrodding this I would want to make certain that the bonds were sold while I was still in a position to vote.
If the blogger is right someone or someones intervened to cause a delay in the sale of the bonds, thus costing us $17 million. I would like to know who was involved if the allegation is true.
We deserve better
Brutus
elpasospeak 
The City has been fighting the release of personal emails. Could the delay on the bonds have something to do with that? If there are material facts that investors should know before purchasing the bonds, the City could find itself in real trouble for defrauding the investors.
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Very interesting observation.
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Whether it’s a failure of our city management, the firms handling the ballpark bond offering or a combination of the two, the higher interest we’re paying is totally unjustified. After reading and re-reading all the recent ballpark bond articles in the local media, I still don’t know which bankers, underwriters or law firms, etc., were involved in the ballpark bond process.
As I commented on the “Fitch Analysis” posting last week, the DETROIT FREE PRESS reported Wednesday that even Oakland County, which is the Detroit market, is going to market soon with a huge bond offering. They’re not even expected to pay a “Detroit penalty” on their interest rate.
This is the opening paragraph of a recent article on Bloomberg.com:
“El Paso, Texas, the second-largest U.S. city without a professional sports team, is borrowing $53 million with yields at record lows as it joins municipalities nationwide betting that stadiums will rejuvenate downtowns.”
Note the words: “with yields at record lows”. Our city management totally blew it. Despite taxpayer concerns, they committed to spend tens of millions of dollars, and then they failed to follow through in a timely fashion, costing us even more.
Anyone who truly cares about just had badly we botched this process should read the entire, lengthy article on Bloomberg.com:
http://www.bloomberg.com/news/2013-05-29/win-or-lose-el-paso-guarantees-baseball-bondholders-muni-credit.html
Let’s not forget that a few years ago two Bear Stearns investment bankers pleaded guilty to bribing local elected officials, which was in part related to bond offerings:
http://www.elpasotimes.com/publiccorruption-past/ci_7845176
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You couldn’t find the names of the investment banks because of poor reporting. The lead underwriters were Goldman Sachs, Wells Fargo and Raymond James. The complete offering doc can be found at:
http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=2&ved=0CDwQFjAB&url=http%3A%2F%2Fwww.munios.com%2Frj%2Fre.ashx%3Ff%3DTX-ElPaso_POS.pdf&ei=LHMwUr2_K6mg2gXVjYDABg&usg=AFQjCNHtt1uHy_GE7WbGIg5RZX8qt-sUrQ&bvm=bv.51773540,d.b2I
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the rate is justified due to the risk. the higher the risk, the higher the return demanded by investors. There’s no spin allowed there, and if spin occurs, the SEC will be most unhappy. Perhaps, we shouldn’t be so sure yet that the SEC won’t be unhappy one day with things the city worked hard to hide from the public.
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