So I saw the notice that some Port Authority debt was being rated and didn’t think much of it.. Of course, the way this works is that new debt ratings like that don’t normally happen spontaneously, but reflect some new debt offering or other big change. So it comes as no big surprise that the Port Authority is paying a big penalty to get out from some variable rate debt.
$39 million bucks… I wonder what it would have cost if they dealt with it earlier? No biggie.
Something I should have caught… or maybe I did? I think it is the same debt mentioned here in 2008. If it is the same debt, then the story today is far less interesting than it could have been. There is, or was, at least the theoretical possibility of foreclosure on some “T” cars somewhere woven in there. I have this image in my head of the cars being loaded onto barges for shipment down river and then shipped to Belgium or something.
I also don’t get the line about this debt becoming “unpredictable” and thus the reason they had to shell out nearly 40 mil. I think there are innumerable ways to hedge a debt instrument to make your budgeting less volatile. Makes no sense as transcribed. They basically chose to borrow in a highly risky way and chose not to hedge it in any way.
Alas… water under the bridge and I like the general theme that this was all just a problem others have gotten into. No, many many places never got into these binds. But let’s ask the rhetorical question again and ponder what other variable rate, auction rate or ’swaption’ debt is still out there looming ready to hit someone’s bottom line. Say large public agencies with big debt outstanding. Some others with letters of credit about to expire?
Bueller?
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