Deep In Debt

[...] Home Loans HARRISBURG, Pa. (AP) – States, cities, hospitals and major public agencies battered by wild interest rate swings in one sector of the municipal bond market are scrambling to refinance the debt as they add up the damages to their budgets and nurse some hard feelings. The highest-profile fallout so far is the tightening of the student-loan market, including the suspension of new student loans by agencies in Pennsylvania, Iowa and Michigan. There are also fewer bond insurers whose backing is worth the money, after most were downgraded because of growing losses in mortgage-backed securities. Refinancing 'A year ago, we could have issued debt without a problem in a number of different markets,' said Tim Guenther, the chief financial officer of Pennsylvania's student-loan agency, the second-biggest issuer of auction-rate debt this decade. For more than 20 years, investment banks promised government and nonprofit agencies they could save money by selling auction-rate bonds. Those securities had terms of up to 30 years, but since the interest paid on them was reset at auctions every 7, 28 or 35 days, investors treated them like short-term debt and the rates paid by issuers were lower than if they sold plain-vanilla long-term bonds. No Cost Refinance As the crunch intensified, investment banks also starting backing away from their promise to buy at auctions the bonds that no one else wanted. That caused many auctions to technically fail, triggering requirements that called for higher interest rates for a day or longer — the Pennsylvania Housing Finance Agency paid 25 percent at one point — and prompting a rush to refinance into fixed-rate bonds or bank-backed variable-rate bonds. While officials from states, cities, public authorities and nonprofit hospitals say they intend to get out of the auction-rate market even if it takes all year, the demand for safer securities has left at least one analyst concerned that lenders are in too short supply. [...]

[...] Debt Consolidation HARRISBURG, Pa. (AP) – States, cities, hospitals and major public agencies battered by wild interest rate swings in one sector of the municipal bond market are scrambling to refinance the debt as they add up the damages to their budgets and nurse some hard feelings. The highest-profile fallout so far is the tightening of the student-loan market, including the suspension of new student loans by agencies in Pennsylvania, Iowa and Michigan. There are also fewer bond insurers whose backing is worth the money, after most were downgraded because of growing losses in mortgage-backed securities. Mortgage Refinance 'A year ago, we could have issued debt without a problem in a number of different markets,' said Tim Guenther, the chief financial officer of Pennsylvania's student-loan agency, the second-biggest issuer of auction-rate debt this decade. For more than 20 years, investment banks promised government and nonprofit agencies they could save money by selling auction-rate bonds. Those securities had terms of up to 30 years, but since the interest paid on them was reset at auctions every 7, 28 or 35 days, investors treated them like short-term debt and the rates paid by issuers were lower than if they sold plain-vanilla long-term bonds. Heloc As the crunch intensified, investment banks also starting backing away from their promise to buy at auctions the bonds that no one else wanted. That caused many auctions to technically fail, triggering requirements that called for higher interest rates for a day or longer — the Pennsylvania Housing Finance Agency paid 25 percent at one point — and prompting a rush to refinance into fixed-rate bonds or bank-backed variable-rate bonds. While officials from states, cities, public authorities and nonprofit hospitals say they intend to get out of the auction-rate market even if it takes all year, the demand for safer securities has left at least one analyst concerned that lenders are in too short supply. [...]

[...] Loan HARRISBURG, Pa. (AP) – States, cities, hospitals and major public agencies battered by wild interest rate swings in one sector of the municipal bond market are scrambling to refinance the debt as they add up the damages to their budgets and nurse some hard feelings. The highest-profile fallout so far is the tightening of the student-loan market, including the suspension of new student loans by agencies in Pennsylvania, Iowa and Michigan. There are also fewer bond insurers whose backing is worth the money, after most were downgraded because of growing losses in mortgage-backed securities. Refinance Home Loan 'A year ago, we could have issued debt without a problem in a number of different markets,' said Tim Guenther, the chief financial officer of Pennsylvania's student-loan agency, the second-biggest issuer of auction-rate debt this decade. For more than 20 years, investment banks promised government and nonprofit agencies they could save money by selling auction-rate bonds. Those securities had terms of up to 30 years, but since the interest paid on them was reset at auctions every 7, 28 or 35 days, investors treated them like short-term debt and the rates paid by issuers were lower than if they sold plain-vanilla long-term bonds. Refinancing Mortgages As the crunch intensified, investment banks also starting backing away from their promise to buy at auctions the bonds that no one else wanted. That caused many auctions to technically fail, triggering requirements that called for higher interest rates for a day or longer — the Pennsylvania Housing Finance Agency paid 25 percent at one point — and prompting a rush to refinance into fixed-rate bonds or bank-backed variable-rate bonds. While officials from states, cities, public authorities and nonprofit hospitals say they intend to get out of the auction-rate market even if it takes all year, the demand for safer securities has left at least one analyst concerned that lenders are in too short supply. [...]