Municipal Bond Deals Squeezed By Credit Crisis

Source: Washington Post

The widening credit crunch is making it harder for cities and school systems to get money for buildings, ballparks and other vital projects from the $2.5 trillion market for municipal bonds, a sector of Wall Street that rarely sees trouble.

That is leaving them with a tough choice: either put off the projects, or pay higher interest rates on their bonds, a cost that ultimately would fall on the backs of taxpayers.

The problem is affecting municipalities with lower credit ratings, which require them to pay more to borrow money.

Faced with the prospect of paying higher interest rates this month, Chicago canceled a $960 million bond. Miami-Dade County pulled a $540 million offering for its airport. And the District has a $350 million bond for schools, parks and roads scheduled for next month that could be delayed if credit conditions continue to deteriorate, a top D.C. finance official said.

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