April 29, 2008 |
U.S. municipal borrowers pushed down yields on auction-rate bonds to the lowest in 11 weeks by moving to eliminate at least $56.5 billion, or 34%, of the debt they had in the market. Local governments disclosed plans to redeem about 150 tax-exempt auction issues totaling $8.3 billion last week, according to investment bank Siebert Brandford Shank & Co. That's the most since the $166-billion municipal auction market began falling apart in February, the firm said. States, cities and hospitals are replacing the securities and bidding for their own bonds at auctions that set yields to cut interest costs that rose as high as 20%. The average rate on bonds reset weekly fell 2.55 percentage points to 4.34% from a record 6.89% on Feb. 20, a Securities Industry and Financial Markets Assn.
March 11, 2008 |
Eaton Vance Corp., the second-largest U.S. manager of closed-end funds, borrowed $1.6 billion to buy back auction-rate preferred stock from investors who were stuck with the securities after the market for them froze up in January. Auction-rate securities are long-term bonds or preferred stock whose interest rates are reset as often as weekly at auctions designed to bring together buyers with investors who want to sell their holdings. But the market for the securities, which had been issued by municipal borrowers and closed-end mutual funds, came unhinged as investors began to shun paper backed by troubled bond insurers.
March 13, 2008 |
A growing number of investment funds say they're stepping up plans to return cash to investors who have been stranded in so-called auction-rate preferred stock -- one of the recent casualties of the credit crunch. But the process may be slower than some investors might like. On Wednesday, Chicago-based Nuveen Investments Inc. said it was working on refinancing $15.4 billion of auction-rate stock, considered a type of debt, issued by 100 of its closed-end mutual funds. The firm said it hoped by the end of this month to begin announcing plans for 13 of the funds to redeem their preferred shares.
January 14, 2012 |
California regulators have announced a final settlement in a dispute with E-Trade Securities that could refund up to $20 million to Golden State investors. The California Department of Corporations late Friday said it closed an investigation that alleged E-Trade misrepresented so-called "auction-rate securities" to buyers as "safe, cash-equivalent products, even though the products faced increasing liquidity risk. " E-Trade also will pay nearly $1.1 million in administrative penalties to the state and agreed to abide by a legal order prohibiting violations of California securities laws, including not supervising brokers selling auction-rate securities, the department said in a statement.
May 18, 2010 |
California brokerage Thomas Weisel Partners Group Inc. stuffed $16 million in shaky securities into the accounts of three unsuspecting corporate customers so the brokerage could pay executive bonuses, according to a civil complaint by regulators that was made public Monday. The customers were stuck with the securities when the market for the so-called auction-rate debt froze weeks later as the financial crisis was unfolding in early 2008, according to the complaint filed by the Financial Industry Regulatory Authority, which oversees and is funded by the brokerage industry.
February 22, 2008 |
California, the biggest borrower in the municipal bond market, will replace $1.25 billion of so-called auction-rate bonds with traditional debt after a series of auction failures nationwide sent rates soaring. The state will convert $400 million of auction-rate general obligation bonds sold in 2003 and $500 million of power revenue bonds and $350 million of water bonds sold in 2002, debt manager Paul Rosenstiel said Thursday. The bond sales will occur within months, he said. "We plan to redeem these as soon as we can so that we are out of auctions," he said.