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Municipalities Feel the Credit Crunch

More interesting fallout from the Subprime credit crunch. Cities that once relied on the low-interest bond market for loans to complete projects are now beginning to see those interest rates go up, and projects are being put on hold as a consequence:

Municipal Bond Deals Squeezed By Credit Crisis – washingtonpost.com

The municipal bond market has been squeezed by steep losses among bond insurance firms. Towns and cities with poorer credit ratings often rely on these insurers to back their bonds, enabling them to pay lower interest rates. But now bond insurers are facing massive write-downs because they promised to cover losses in the mortgage industry, leading some to stop insuring new projects.

By Tommy Belknap

Owner, developer, editor of DragonFlyEye.Net, Tom Belknap is also a freelance journalist for The 585 lifestyle magazine. He lives in the Rochester area with his wife and son.