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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.
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3 comments:

  1. James B. ShearerFebruary 12, 2011 at 9:16 AM

    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.

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  2. DaveFebruary 14, 2011 at 7:28 AM

    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.

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  3. Epsilon GivenFebruary 14, 2011 at 8:46 AM

    "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!

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