Record Lows
The 10-year index of top-rated municipals was little changed at 2.09 percent today, up from 2.05 percent on Sept. 12, the lowest level since January 2009, when Bloomberg's data for the securities begins. Yields on top-rated 30-year tax-exempts rose to 3.66 percent after falling to 3.56 percent on Sept. 12, also the lowest since Bloomberg records began.
California may pay higher borrowing costs in the future if the federal government passes President Barack Obama's job-creation bill that includes lowering the tax exemption on interest earned on municipal bonds for the highest earners to 28 percent from 35 percent.
Lockyer, a Democrat, on Sept. 16 estimated the state would pay $7.7 billion more on future issuance for the life of the securities, if lawmakers reduce the exemption.
California plans to sell $15 billion of bonds over this and the next fiscal year, Lockyer said. That compares with $10.4 billion last year and $20.5 billion in 2009.
The state's debt, including price changes and interest income, returned 9.2 percent through Sept. 16, outperforming the overall tax-exempt market by 120 basis points, according to S&P Municipal Bond Indexes.