Even California Shows Halo With Insatiable Demand: Muni
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California’s swelling budget deficit is proving no match for investors desperate to boost returns with municipal interest rates close to 45-year lows.
The extra yield investors demand to hold debt of California issuers instead of top-rated local-government bonds matched a three-year low on May 15, according to Bloomberg Fair Value data. The day before, Governor Jerry Brown proposed cutting state workers’ pay 5 percent to save money after the state’s spending gap grew 71 percent since January.