What will the interest rate be on the bonds?
The proposed resolution before the Board would allow interest rates on the bonds of up to 5.5% but the discussions before the Board have usually calculated based upon an interest rate of 4%.
Interest rates on taxable municipal bonds have been going up for the last month and experts are predicting that rates will continue to increase as the Federal Reserve Bank buys less US Treasuries.
By Sam Forgione
June 27 (Reuters) - Investors in funds based in the United States pulled $8.62 billion out of taxable bond funds in the latest week, marking the first four-week streak of outflows from the funds since 2008, data from Thomson Reuters' Lipper service showed on Thursday.
The outflows from taxable bond funds over the week ended June 26 were up from outflows of $507.9 million the prior week. Stock funds, meanwhile, had outflows of $6.8 billion over the reporting period, the most since late April.
The outflows from bond and stock funds came as fears persisted that the U.S. Federal Reserve might reduce its $85 billion in monthly purchases of Treasuries and agency-mortgage securities. The Fed's purchases have kept interest rates low and helped underpin the rally in U.S. stocks this year.
The current bond rating of the County is AA but the creation of debt by the sale of these bonds may affect the County’s credit rating in the future, which would affect all future bond sales by all agencies that use the County’s credit rating over the next 25 years.
By the time the bonds are sold, later this year or early next year, the interest rates may be considerably higher than the 4% that the County commissioners are now using in their calculations.