Muni Bonds Bounce Back

Municipal Bonds bounced back Tuesday after two weeks of near freefall.  Bloomberg reports that "California, the largest borrower in the U.S. municipal market, sold $1.75 billion of bonds after attracting record demand from individuals drawn to the highest tax-exempt yields in more than three years."

The state's bond rating is the second lowest in the nation (edging only Katrina ravaged Lousiana), and on that front, Treasurer Bill Lockyer sent the letter to Standard & Poor's, Moody's and Fitch in an effort to shore up the bond rating as Congress prepares for a hearing on the state and local government bond market.  It's being reported that the state could save up to $5 billion in interest on voter approved infrastructure bonds if this rating improves.