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California Update
GO Bonds, Capital Spending, Budget Deficits and Cash
On March 24, the State of California sold $6.5 billion of general obligation (GO) bonds. Although the State usually sells GO bonds five to six times a year, this was the first sale in more than nine months. Enactment of a budget on Feb. 20 set the stage for the new issue, but the budget and the bond sale didn’t entirely resolve circumstances that created cash pressures on the State and forced the suspension of thousands of capital projects.
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Former Deputy Treasurer Rosenstiel Returns to DLR
Paul Rosenstiel has rejoined De La Rosa & Co. in its San Francisco office, returning to the firm where he previously worked for ten years. His move comes after two years as Deputy State Treasurer of California, during which time he helped the State of California cope with the worst financial and budget challenges it has faced in decades.
“I’m excited to be back at De La Rosa,” said Rosenstiel. “I’m convinced that regional firms with a focus on public finance, like De La Rosa, are in the best position to help municipal clients meet the challenges they face today.”
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Guest Judges to Pick Winning Essays
in Scholarship Contest
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De La Rosa & Co. is celebrating the firm’s 20th anniversary this year by awarding $2,000 college scholarships to 20 seniors from 20 high schools across California. Participants wrote original and creative essays based on a quote from Albert Einstein. Teams from De La Rosa are selecting three finalists from each school, and four guest judges will pick the 20 winners.
The guest judges are drawn from the arts, law enforcement, business and the clergy: Screenwriter Ligiah Villalobos is best known for her 2008 movie, Under the Same Moon; L.A. County Sheriff Lee Baca commands the largest sheriff’s department in the world; Rubén Barrales heads the San Diego Regional Chamber of Commerce and was president of the San Mateo County Board of Supervisors; and Father Gregory Boyle of East Los Angeles’ Dolores Mission founded Homeboy Industries.
Click here for more about the “Fabric of Society” competition.
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Villalobos
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Baca
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Barrales
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Boyle
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Stronger Market Adapts to BABs, State Budget Vote
Tax-exempt trading slowed going into the long Memorial Day weekend. Market strength continued as the threat of unmanageable supply from taxable Build America Bonds (BABs) diminished, and light secondary trading continued at higher levels (with lower yields).
Many market participants waiting for results from California’s special election were surprised when the market rallied after voters rejected five budget-related propositions. New investor sentiment suggests the federal government may, if necessary, bail out municipalities during this crisis.
Lower tiered credit spreads have tightened drastically as investors recently showed more comfort in taking market risk. The bearish feeling is still out there; both relative and absolute yields have been pushed far since BABs were first issued, yet overall market sentiment is balanced to neutral from a lack of primary supply.
(complete version)
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