"I can't do anything,'' said Biddar, who was so eager to unlock his money that he was willing to accept 11 percent less than what he paid for the securities. "Bank of America got me into these securities that are supposed to be as safe as a money market, and now they won't get me out.''

Bank of America, UBS AG, Wachovia Corp. and at least four dozen other firms that sold $330 billion of securities with rates set through periodic bidding are thwarting attempts to create a secondary market that would allow investors to access their cash, according to investors. Dealers claim they are saving customers from needless losses on securities they marketed as similar to cash-like instruments.

"By allowing customers to sell at a discount, the banks allow customers to establish damages,'' said Bryan Lantagne, the securities division director for Massachusetts Secretary of State William Galvin. Lantagne is head of a task force for nine states looking at whether brokers misrepresented the debt as an alternative to money-market investments.

Investor Lawsuits

At least 24 proposed class action suits have been filed since mid-March against brokerages over claims investors were told the securities were almost as liquid as cash.

Investors ranging from retirees to Google Inc. in Mountain View, California, have been trapped in auction-rate bonds for more than three months after dealers that ran the bidding suddenly stopped supporting the market as their losses mounted on debt linked to subprime mortgages. Before February, dealers routinely bought securities that went unsold, reassuring investors that they could get their money back on a moment's notice.

About 99 percent of public auctions for auction-rate securities sold by student-loan agencies and closed-end funds fail, as do 48 percent of those for municipals, according to data compiled by Bloomberg. UBS, which cut the value of auction-rate securities held for its customers by 5 percent in March, said yesterday it plans to close its municipal bond business.

'Only Choice'

"For someone needing their cash, the only choice is to go to the secondary market and sell them with a haircut,'' said Steven Caruso, an attorney at Maddox Hargett & Caruso in New York who is representing investors in lawsuits against dealers. "I don't think brokerage firms have any interest in selling these.'' Fieldstone managing director Robert Franz declined to comment on potential auction-rate purchases by the New York-based investment firm.

Bank of America spokesman Matt Card said the bank isn't "talking about specifics of the auction-rate securities topic.'' Calls to Biddar's broker, Thomas Cali, and Cali's regional manager, Jon Foster, weren't returned.

UBS told Chris Longman, 35, a lawyer in San Diego, and his wife, Paige Hazard, 30, that it wouldn't try to find a buyer for their $375,000 of auction-rate securities in the secondary market because "it's inefficient and results in low prices,'' said Longman. They were willing to take a discount on the Franklin Templeton Limited Duration Income Trust shares because they want the money available to buy a house, Longman said. "The secondary market is inefficient compared to what?'' asked Longman. "The primary market doesn't even exist any more.''

'Very Illiquid'

Karina Byrne of UBS said the secondary market for auction- rate securities is "generally very illiquid,'' though the Zurich firm "will seek to execute client sell orders, where available, at the best price we can find.''

"We are actively working with the issuers of these securities to refinance them, which is the ultimate answer,'' John Thain, chief executive officer of New York-based Merrill Lynch & Co., told reporters in Mumbai on May 8. "The securities are significantly over-collateralized, so we are confident that our investors will eventually get the par. In fact, as the securities get refinanced, they do get that par back.''

States, cities and other municipal issuers refinanced, converted or disclosed plans to redeem by July 18 at least $76.1 billion of auction-rate securities, according to data compiled by Bloomberg. Mutual-fund companies have redeemed or said they would refinance about $19.8 billion.

Loans Offered John Hancock Funds announced today that it restructured $89 million of debt for its John Hancock Income Securities Trust, allowing it to replace auction-rate preferred securities sold by the trust. The refunding marks the seventh and final fund to be refinanced by the unit of Toronto-based Manulife Financial Corp.

After David Wilner, a 32-year-old New Yorker, found a buyer for $200,000 of auction-rate securities issued by Chicago-based Nuveen Investments Inc., Wachovia refused to complete the sale for him, he said. Instead, the bank offered to lend him money at 5 percent interest, using the securities as collateral, he said. At the time, Wilner said he was getting only 2 percent interest. "They said no without an explanation,'' Wilner said. "Then they offered to loan me my money. What can I do? I am handcuffed.''

Justin Gioia, a spokesman for Charlotte-based Wachovia, declined to comment. Frank Russo, a Wachovia attorney Wilner said he was directed to, said he isn't allowed to comment on clients.

Documents governing auction-rate securities typically say there is no obligation for dealers to support a secondary market, said John Duvall Sr., a former Merrill Lynch broker in Milan, New York, who is now an expert witness in securities fraud cases.

'Sounds Like Stonewalling'

An investor who finds a buyer should be able to move the securities to another dealer or take possession to complete the transaction, said Vincent DiCarlo, who worked as a lawyer at the SEC's enforcement division. "If a dealer is refusing to complete a transaction it sounds like stonewalling,'' said DiCarlo, who is now a securities lawyer in Davis, California.

The Securities Industry and Financial Markets Association, a New York-based association for dealers, put a list of secondary market resources on its Web site. It said in a statement that it "has undertaken a number of projects to be helpful in this period of dislocation in the auction-rate securities market.''

Officials at the Financial Industry Regulatory Authority, the self-regulatory group for securities dealers in Washington, declined through spokesman Herb Perone to respond to questions. Dealers' Duty Restricted Stock Partners has handled "a few hundred'' secondary market trades for auction-rate investors, said Barry Silbert, chief executive officer of the New York-based firm. "It's securities dealers' duty to facilitate the transactions,'' Silbert said.

Some investors who didn't need immediate access to their cash initially enjoyed high returns for about two months as auction failures drove up rates. The rate on municipal auction-rate bonds with weekly bidding shot up to 6.89 percent for the week ended Feb. 20 from 3.90 percent at the start of the year, according to an index compiled for Sifma. The rate has since fallen to 3.12 percent.

Maxwell Stokes, 30, a commodities trader with Hoya Capital in New York, said he was told by his broker at Wachovia eight weeks ago that he was stuck in $50,000 of auction-rate preferred shares issued by money manager Cohen & Steers Inc. in New York. Needing the cash for an Oct. 12 wedding and to buy a house, Stokes said he moved his account to online brokerage TD Ameritrade Corp. of Omaha, Nebraska.

'Safe Security'

"When I bought these I wanted a safe security and I was told they were redeemable at par,'' said Stokes. "Then when the market failed and I wanted a secondary market to trade out, I was told that Wachovia doesn't make a secondary market.''

Biddar, the New Jersey investor, said he plans to press Bank of America to complete the trade with Fieldstone, even if he has to put a billboard on a trailer complaining about how he was treated and take it to the bank's branches. "I'm going to do what I have to,'' Biddar said. "I want them to sell my securities.''

Following is a chart of largest issuers of outstanding municipal auction-rate securities, 2000-2007.

1. Citigroup, $39.73 billion *

2. UBS, $31.50 billion

3. Morgan Stanley, $20.13 billion

4. Goldman Sachs, $17.80 billion

5. JP Morgan, $15.72 billion

6. Bear Stearns, $12.61 billion

7. Merrill Lynch, $12.37 billion

8. Bank of America, $11.03 billion

9. RBC Dain Rauscher, $10.25 billion

10. Lehman Brothers, $9.74 billion

*Includes Salomon Smith Barney.

Source: Bloomberg data.

Investment grade includes AAA, AA, A and Baa rated. 

By Jeremy R. Cooke

Feb. 22 (Bloomberg) -- California, Florida schools and the operator of John F. Kennedy International Airport joined a growing list of municipal borrowers exiting the U.S. auction- rate bond market as record failures push taxpayer costs higher.

Thousands of auctions run by banks to set rates on the debt failed this month as investors shunned the securities and bankers refused to submit bids, sending interest costs as high as 10 percent on some bonds. Auctions covering as much as $26 billion of bonds a day failed to attract enough buyers since Feb. 13, according to Bank of America Corp.

Florida's Palm Beach County Schools converted $116 million of the securities into fixed-rate debt this week, while the Seattle area's Valley Medical Center refinanced $170 million. The Port Authority of New York and New Jersey said it would redeem $200 million next month after its weekly interest rate rose as high as 20 percent.

``We expect to be out of the auction-rate market business in six to eight weeks,'' said Steve Coleman, a spokesman for the Port Authority, which operates JFK and New York City's other major airports and owns the World Trade Center site.

Rates in the $133 billion market are determined through a bidding process every seven, 28 or 35 days. Auctions fail when there aren't enough buyers, leaving bondholders who wanted to sell stuck with the securities and taxpayers with higher interest costs.

Rising Failures

Yesterday's 641 auctions of publicly offered bonds resulted in 395 failures, or 62 percent, according to data compiled by Bloomberg from four auction agents including Deutsche Bank AG. Just 44 failures were recorded between 1984, when the market was created, and the end of last year, Moody's Investors Service said in a Feb. 19 report.

The rates when auctions fail are spelled out in documents governing the bonds, and are set as high as 20 percent or based upon money-market benchmarks.

Borrowers -- including local governments, hospitals, museums, student-loan agencies and closed-end funds -- must pay the penalty rates until buyers support future auctions, or they can modify the bonds to another kind of variable-rate debt or apply a fixed rate.

The average rate for seven-day municipal auction bonds rose to a record 6.59 percent on Feb. 13 from 4.03 percent the previous week, according to indexes compiled by the Securities Industry and Financial Markets Association.

`Unacceptable Level'

Palm Beach school officials started working on a conversion plan in December when rates topped 4 percent. They reached 9.75 percent this week, short of the 15 percent penalty rate. The district's interest payment for this week's auction was about $220,000, up from $107,000 during a week in December.

``As a public entity, that's an unacceptable level of risk for us,'' said Leanne Evans, treasurer of the 170,000-student district, one of the five largest school systems in Florida. After converting the debt, the district pays a 4 percent yield.

California, the biggest municipal borrower, plans to replace $1.25 billion of auction-rate bonds, said debt manager Paul Rosenstiel. New York City's Municipal Water Finance Authority yesterday said it will pay off auction debt by selling $684 million of variable-rate demand notes on March 18.

Until this year, banks that collect annual fees of about 0.25 percent to run auctions would step in to stop failures when bidding faltered. Goldman Sachs Group Inc., Citigroup Inc., UBS AG and Merrill Lynch & Co. stopped committing capital after banks sustained at least $146 billion in credit losses and writedowns from the subprime mortgage collapse. That's left corporate treasurers and wealthy individuals, some of whom bought the debt as cash equivalents, unable to access their money.

continues... 

Spitzer möchte damit einer wahrscheinlichen Abstufung der Ratingagentur Moody´s zuvorkommen. Diese hatte vor einigen Tagen mitgeteilt, dass Moody´s bis Ende Februar ihre neue Einschätzung gegenüber den Bond Versicherern veröffentlichen will. Da sich die Situation an den Fixed-Income-Märkten und vor allem an der Immobilienfront nicht verbessert hat (sondern sogar verschlechtert), ist ein Downgrade sehr wahrscheinlich. Dieser Downgrade hätte zur Folge, dass alle von den Monolinern versicherten Produkte ebenfalls nicht mehr AAA geratet werden würden. Da der versicherte Bond-Markt riesig ist ($2.5 Billionen – Fitch Juli 2007), sind die Auswirkungen gewaltig: die Finanzierungskosten für Municipals (Marktvolumen rund $1.2 Billionen) steigen deutlich an. Dementsprechend muss dann an anderer Stelle gespart werden (z. B. Kündigungen, keine Gehaltserhöhung,..). Zudem führt dies zu weiteren gigantischen Abschreibungen. Dies liegt daran, dass Investoren von den meisten strukturierten Produkten wie beispielsweise CDOs mark-to-market Verluste nicht sofort in ihre Bücher nehmen müssen, wenn sie vorhaben das Produkt bis zur Fälligkeit zu halten und es zur keiner Ratingabstufung kam. Durch eine Ratingabstufung müssten die Investoren dann sofort ihre Verluste abschreiben. Dies wird für einige Banken und Versicherer noch sehr teuer werden. Zu guter Letzt ist noch der Vertrauensverlust zu nennen: dies wird dazu führen, dass die Spreads noch weiter rauslaufen werden (obwohl wir uns in einigen Bereichen schon auf sehr hohem Niveau bewegen – siehe zum Beispiel iTraxx und CDX).

Da ich es für unwahrscheinlich halte, dass sich mehrere Banken zusammentun und den Monolinern das Geld schenken werden, wird es wohl zu einer Aufspaltung der Firmen kommen. Eine Firma wird dann ausschließlich Municipals versichern (also das klassische Geschäftsfeld der Monoliner) und die andere Firma wird auf allen übrigen Positionen (CDOs, CDOs squared,..) sitzen bleiben. In diesem Fall würde letztere Firma natürlich Pleite gehen, aber zumindestens wäre das Municipal Bond Problem gelöst. Dies scheint daher die langfristig beste und wahrscheinlichste Lösung zu sein. In ein paar Tagen wissen wir mehr!

A Amposta l'increment global és del 3,5%. Segons el web de l'Ajuntament equival a l'IPC català. Algunes taxes es queden igual, com la llicència d'obertura d'establiments, les llars d'infants, el transport públic, el telecentre, l'IBI i l'impost de vehicles. Altres disminueixen, com el 10% de la recollida d'escombraries als locals industrials i comercials, el 5% de l'Escola d'Art, i el 6% de les entrades al teatre. La recollida d'escombraries augmenta un 25%, un 8% menys de la proposta d'augment del Consorci de Gestió de Residus arran del soterrament dels contenidors -indignant que soterrar els contenidors impliqui penalitzar amb impostos la societat-. Podeu consultar més informació al web de l'Ajuntament d'Amposta.

Quant a Tortosa, la majoria d'impostos s'actualitzen amb l'IPC (2,5%). La recollida d'escombraries augmenta un 14%, per tal de reduir la diferència entre allò que es paga i el preu real del servei. La tarifa de l'aigua augmenta un 4,5%. Podeu consultar més informació al web de l'Ajuntament de Tortosa.

Nota: Com es pot veure, l'IPC al qual fa referència l'Ajuntament d'Amposta (3,5%) i el de Tortosa (2,5%) no són el mateix. Segons l'Idescat l'IPC  general de Catalunya de l'any 2006, segons la nova base 2006=100, fou del 3,7%, mentres que el d'Espanya fou el 3,5%.

Més enllaços:

• Tortosa apuja un 14% el rebut de les escombraries i un 4,5% el de l'aigua (La Marfanta).
• Amposta puja un 25% el rebut de la brossa pel soterrament dels contenidors (La Marfanta).

Y claro como iban a salir las cuentas del aparcamiento, si según esta información publicada en EL PUNT la empresa encargada de su construcción se gastaba el dinero en pagarle viajecitos particulares al gerente de la Empressa d'Aparcaments Municipals de Tarragona (EAMT).

Por cierto este gerente si se demuestra que ha utilizado su puesto de trabajo (elegido a dedo por el anterior gobierno municipal) para sacar provecho económico, digo yo que tendrá la decencia de presentar ¡ya! su dimisión... y bueno puestos a pedir el responsable político que lo nombro también podría dejar esto de la política, pues una vez más me queda claro para que estaban algunos en convergencia y en la política municipal, me recuerdan a un tal Zaplana, ese que dijo "yo estoy aquí pa' forrarme".

Os dejo el enlace en EL PUNT para que podáis mirar la noticia.