Quote:
Originally Posted by corporatejay
Do you work in investment banking or brokering? The reason I ask is because pricing on bonds is heavily dependent on leverage. Admittedly I don't know how municipal bonds get priced, but any investment grade notes are going to be dependent on market as well as how levered the city is. Presumably this could impact their ability to get financing in the future.
For example if they go out and get this at 3.25%, the next time they go to market, given the additional debt they've taken on, they might get 3.5% (assuming all other things being equal).
That extra .25% over 20 years isn't insignificant.
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What you're suggesting COULD happen. But probably not (which is why I keep saying it's inaccurate).
It COULD happen, if they had already saturated their credit lines (i.e. issued too much debt already).
But if that were true (that they already have too much debt floating) they would never agree to issue for this project.