The state of Pennsylvania sold $815 million worth of municipal bonds today, the first such activity since the state capital of Harrisburg filed for Chapter 9 bankruptcy last week. The city's bankruptcy, which has been discussed previously in this blog by this Bucks County bankruptcy lawyer, apparently did not slow down the appetite for state bonds. By all accounts, the city's financial problems did not affect the marketability of the state bonds. Official ratings (such as those from Moody's) have not yet been updated since the bankruptcy, however.
Pennsylvania sold $815 million in what are called "general obligation bonds" that vary in maturity from between one and twenty years. A tranche of $30 million for 10-year bonds sported a yield of 2.63% and a separate tranche for 20-year bonds (on just under $50 million) yielded as much as 4.00% flat. A tranche is a portion of a security offered part of a larger transaction. King Law Center offers assistance to those seeking to file a Bucks County bankruptcy. No aspect of this blog posting should be seen as financial advice regarding the wisdom of an investment in state bonds.
In any event, those allegedly in the know say the Harrisburg filing had a nominal impact on the state's bond market. They point to the limited scope of the Harrisburg bankruptcy, in that the local filing affects only local matters. The crossing of local Harrisburg governance and state projects funded by state bonds is surprisingly minimal. Despite legal challenges ahead for the city, the state's business still goes on. The Harrisburg bankruptcy will also not affect the federal bankruptcy filings that take place in Bucks County (whether through King Law Center or any attorney's office).
Interestingly, the current Moody rating for Pennsylvania state bonds is Aa1, which falls just under the highest ranking of triple A. S&P gives a double A rating to Pennsylvania's bonds, which is two levels below the triple A but double-A is still considered a very strong and safe investment.
Today, the State Senate also approved a bill, which earlier had passed through the General Assembly, that permits the creation of a government panel to operate any city (including Harrisburg) that rejects state-sponsored recovery plans. Recall that the state had opposed the Harrisburg bankruptcy filing. This opposition should lead to early-stage litigation in the bankruptcy to determine the legality of the bankruptcy filing. King Law Center will not provide counsel to either party.
King Law Center, a Bucks County bankruptcy lawyer, will provide you legal counsel, however, if you need a Chapter 7 bankruptcy or a Chapter 13 bankruptcy (though we reserve the right to reject any case, of course). We are pleased that business in Pennsylvania should continue uninterrupted due to the purchase of state bonds by investors, but few in need of a Chapter 7 bankruptcy or Chapter 13 bankruptcy are these investing purchasers. If you do own a bond (or stock or any other asset, though) you must reveal this ownership in your bankruptcy filing. Failing to disclose assets can constitute bankruptcy fraud. Before selling such assets prior to a bankruptcy, as well, be sure to consult counsel, as there are other factors which should be considered.
