Cities Are Buying Bond Insurance That May Be Giving Them Nothing
- Bond insurance didn’t result in lower yields, study finds
- Companies say study is flawed and failed to capture benefits
Photographer: Patrick Fallon/Bloomberg
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Around noon one Wednesday in July, two school districts from California’s Central Valley auctioned off their bonds to Wall Street underwriters.
Both had the same credit rating. The deals were of similar size. They were being issued for the same purpose of refinancing higher-cost debt, and each gave banks the option to include the cost of insuring the bonds against default to help get them the lowest possible interest rates.