Sponsored by Oregon Business

Battered bond market hurts public projects

| Print |  Email
Archives - January 2009
Thursday, January 01, 2009

Battered bond market hurts public projects

SALEM Hidden within the larger economic fluctuations of last year was serious news for Oregon municipalities. The bond market — that typically sleepy backwater of American finance — was also going ballistic.

An oversimplified description of bonds is that they’re the fuel behind nearly every public project. They fund roads, new buildings and hospital expansions. They also give cities the ability to borrow money on a short-term basis. But in October the world’s largest bond buyers —Lehman Brothers, Goldman Sachs, Morgan Stanley — stopped buying, and municipal bond sales in the nation fell by almost 60%. The market has begun to recover, but Oregon municipalities are still faced with high interest rates, a voting public that’s skittish to sign off on new bonds, and the tricky decision of which projects to pursue at a higher cost, which to delay and which to kill.

“That was the most amazing mid-September to mid-October. I’ve never seen anything like that before,” says Laura Lockwood-McCall, the director of debt management at the state treasury. Since that September-to-October stretch, the state has seen a slow increase in the number of municipal bonds sold.

But not all sales are equal. A very good credit rating can suddenly mean a percentage-point difference in an interest rate — a difference that can add up to millions over the life of the loan. That doesn’t just affect agencies that have sold bonds, says Shirley Baron Kelly, assistant finance director at the city of Beaverton and a board member of the Oregon Municipal Finance Officers Association. It also affects those who may want to sell bonds but didn’t account for those new interest costs in their budgets.

“We budgeted 18 months ago,” she says. “Had we only known.”

Oregon agencies will evaluate their bond needs on a case-by-case basis, says Lockwood-McCall. When county finance directors like Dean Stephens at Benton County, and Mike Robison at Clatsop County say they’re not in the bond market right now, the relief in the their voices is almost palpable. Other agencies won’t be so lucky. In November, Oregon voters approved $1.4 million in new bond-funded projects (42% of the total amount was in Clackamas, Multnomah and Washington counties). To fund those projects, cuts will have to be made elsewhere. “This is probably going to be really ugly,” Lockwood-McCall says.

How ugly, no one knows just yet. “There are so many factors that none of us controls,” Baron Kelly says. “I wish I had a crystal ball.”


Have an opinion? E-mail This e-mail address is being protected from spambots. You need JavaScript enabled to view it



0 #1 Oregon Bond Ratesrandy 2009-08-01 19:36:45
I think you should look at the rates of Oregon bonds the the current level of risk the market put in. http://investment-income.net/rates/municipal-bonds-rate-page
Quote | Report to administrator

More Articles

The 10 most successful crowdfunding campaigns in Oregon

The Latest
Wednesday, August 19, 2015
081915-crowdfundingmainBY JACOB PALMER | DIGITAL NEWS EDITOR

One of the hottest new investment trends has proven quite lucrative for some companies.


More Than Meets the Eye

Guest Blog
Tuesday, September 22, 2015
Janet Yellen official Federal Reserve portrait-thumbBY JASON NORRIS | CFA

On September 17, the much anticipated Fed decision was delivered and the equity markets haven't liked it.


Mayoral musings

Linda Baker
Tuesday, September 15, 2015
091515-mayors-thumbBY LINDA BAKER

The 2016 presidential election is shaping up to be the year of the outsider, with Bernie Sanders and Donald Trump capturing leads in the polls and the headlines. In Portland, Wheeler vs. Hales is bucking the outlier trend.


Back to School

September 2015
Wednesday, August 19, 2015

Oregon is home to an abundance of gritty warehouses reborn as trendy office spaces, as well as crafty hipsters turned entrepreneurs. Does the combination yield an equally bounteous office products sector? Not so much. Occupying the limited desk jockey space are Field Notes, a spinoff of Portland’s Draplin Design Company, and Schuttenworks, known for whittling Apple device stands. For a full complement of keyboard trays, docking stations and mouse pads, check out the GroveMade line, guaranteed to boost the cachet of even the lowliest cubicle drone. 


100 Best Nonprofits announced

Wednesday, September 30, 2015

1015-nonprofits01Oregon Business magazine has named the seventh annual 100 Best Nonprofits to Work for in Oregon. The rankings were revealed Wednesday night during an awards dinner at the Sentinel Hotel in Portland.


The List: 100 Best Nonprofits to Work For in Oregon

October 2015
Wednesday, September 30, 2015

Oregon Business magazine’s seventh annual 100 Best Nonprofits to Work For project attracted more than 150 nonprofits from around the state from a variety of sectors, including social services and environmental advocacy.  More than 5,000 employees and volunteers filled out the survey, rating their satisfaction with work environment, mission and goals, career development and learning, benefits and compensation, and management and communications.


Adjusting to the New Economy

October 2015
Monday, September 28, 2015

A conversation with Jonathan Bennett, managing partner at law firm Dunn Carney Allen Higgins & Tongue.

Oregon Business magazinetitle-sponsored-links-02