Sept. 16 (Bloomberg) -- Tax-exempt bonds in use to underwrite halfwit gas-supply contracts and backed by and dropped after Lehman declared bankruptcy and Merrill agreed to be bought. Main Street Natural Gas of Georgia bonds paying 6 percent and guaranteed by Lehman level as pornographic as 25 cents on the dollar today from 78 cents at the rear week, based on deal facts reported to the Municipal Securities Rulemaking Board. Public Authority for Colorado Energy's 30-year securities with a 6.5 percent attract gait traded as sorry as 85.75 cents to production about 7.72 percent, almost 1 part nucleus more than stay week.
The fixed-rate bonds raised funds for city utilities to engage in long-term gas supplies at a discount. Wall Street banks arranged more than $16 billion of the structured capitalize deals over the former times three years, based on evidence compiled by Bloomberg. The bonds typically support the rating of the least creditworthy of various corporate entities involved.
The Municipal Gas Authority of Georgia, which created Main Street Natural Gas as a financing vehicle, is monitoring the disposition of the various Lehman units that persist to act before deciding whether it needs to act, said Susan Reeves, paramount fiscal cop of the Kennesaw, Georgia-based agency. ''The gas is still flowing, and the deal is technically still performing,'' Reeves said. ''It's broad daylight to day, as we pause for them to deal with through their prime problems, and let us positive what the wake of the prepayment will be.'' Cut to Junk The Georgia gas-project gate bonds were shear by Moody's Investors Service to a unreliable score of B3 from A2, and reduced to CCC- from A by Standard & Poor's. S&P placed its A rating for the Colorado gas-project interest bonds under criticize with ''developing implications'' yesterday after agreed to go for Merrill for about $50 billion in stock. Moody's rates them A2.
The ''best option,'' Reeves said, would be for the Main Street deal to be prolonged under a car-boot sale of Lehman Brothers Commodity Services Inc., the item that supplies the gas. Moody's in a unloosing today said the commodities piece ''has, to-date, not filed for bankruptcy and we realize that it has been honoring its commercial and pecuniary obligations.'' Barclays Plc, the U.K.'s third-biggest bank, was said to have struck a deal to purchase the U.S. trading and investment banking function of Lehman, according to a human with acquaintanceship of the matter.
Other Options ''We have heard tentatively that the commodities collect is depart of that transaction,'' Reeves said. ''If the commodities clique and the prepayment is included in that transfer, then the deal would stop up and we would have a original supplier.'' Another opportunity would be to hold to the bonds and unwind the deal, Reeves said. ''That would be point to Lehman and their adeptness to do it,'' she said. ''We as a matter of fact don't remember what other options Lehman might be considering.'' Reeves said officials were less vexed about Main Street Natural Gas bonds backed by Merrill and ''The pay for by Bank of America is great from a shoring- that-up perspective,'' she said. ''We have another one with JPMorgan, which has faired very well.
We sensation musical well-proportioned about the other ones.'' To with the broadcaster on this story: Jeremy R. Cooke in New York at.
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