Friday, February 11, 2011

San Marcos, California: In Trouble?

I see that San Marcos' redevelopment agency bonds due in 2030, even though holding an S&P AA- rating, have a yield of 8.647.  You would not want to put all your money in a single government's bonds, but that's a decent enough yield to tempt me to buy at least some.


  1. I would be a bit wary. See here for an account of what is going on. Apparently Governor Brown is trying to eliminate redevelopment agencies for being in his view a gigantic waste of money. While he said the state would honor existing bonds it is a little unclear whether this extends to bonds sold in a rush after his initial statement. The bonds may in fact be a good deal but the risk involved seems tricky to evaluate if you are not an expert in this sort of thing.

  2. Also, I'd add that at least in the 21st century, ratings agencies seem to be a lagging indicator of a problem, not a leading one.

    Which seems to defeat their whole purpose, but that's what it looks like to me.

  3. "Blighted neighborhoods"? "Affordable housing"? (From the article linked by James.) I'd be wary too: blight is often a result of poor regulation; affordable housing is a sign of a pro-welfare mentality that often causes blight.

    I'd stay away from all that, too!