Interest on "auction-rate" bonds is going up! Who'd'a thunkit? And according to the big O, it's smacking the city of Portland around:
Since Feb. 6, the city of Portland has seen the interest rate on its $150 million in auction bond debt increase from 3.6 percent to 4.47 percent. Market unpredictability could force it even higher.
Unwilling to put up with that kind of volatility, the city has opted to convert the $150 million in auction rate bonds to fixed-rate securities. But stability comes at a price.
Eric Johansen, Portland's debt manager, predicted the city will have to pay 5 percent to 5.5 percent, meaning that the annual payment on that portion of the debt will jump from about $5.25 million to as much as $7.87 million.
Another $150 million of the city's debt will be repriced next week.
Well, at least the brain-trust at the city hopes they can be re-priced next week. It's not as though the warning signs of the danger behind their profligate borrowing of hundreds of millions to finance their pet projects haven't been around for a while. Doesn't matter, though: they'll keep whipping out your credit card to fund more trams and trains.