Like just about everyone these days, California is looking for ways to raise cash and pay bills until tax revenue arrives later this year, and exchange traded funds (ETFs) may be the route to access the notes the state is offering.
California sold almost half of the $4 billion of notes it is offering this week to avert a cash shortage, with tentative yields as much as 1.1% higher than last year, reports Jeremy Crooke for Bloomberg.
Standard & Poor’s has threatened to lower the state’s credit rating if the sale stalls amid a freeze in the bond market.
Notes due May 20, 2009, may offer a yield of 3.75% to 4 percent and debt to be paid off June 22 might yield 4.25% to 4.5%, says the department of California Treasurer Bill Lockyer.
PowerShares Insured California Muni Bond ETF (PWZ) may be a good way for investors to gain exposure to municipal bonds without actually purchasing one. PWZ is down 20.8% year-to-date.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.