3/12/1980 - Laserfiche WebLink

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MAR 12 1980 Box 42 i ci 901 MORTGAGE RATES RANGING FROM 14% TO 16-1/2% (HOUSE DEMAND COLLAPSES) BANK CD's PAYING 18-1/4% FOR 3 MOS. - 18% - 6 MOS. S&L MUST PAY 14.8% FOR 6 MOS. MONEY (30% OF S&L DEPOSITS) PRIME RATE 17-3/4% DISCOUNT RATE NOW 13%. RUMORS OF INCREASE CAUSING MARKET JITTERS - PROBABLY GO TO 15% SOON. FEDERAL FUNDS RATE 16-3/4% COMMERCIAL PAPER - 17-1/4% MR. BLAND COMMENTED THAT ALL THIS CHART DOES IS SHOW THAT THE PRICE OF MONEY IS VERY EXPENSIVE, AND INTEREST ON SHORT TERM MONEY IS VERY HIGH. MR. BLAND THEN DISPLAYED A CHART SHOWING THE RISE OF .THE PRIME RATE OVER THE LAST FEW MONTHS, NOTING THAT ONE CHICAGO BANK AND SOME ON THE WEST COAST ARE AT 18%, AND THE RATES ARE MOVING VERY FAST. HE NEXT PRESENTED A CHART OF THE BOND PUYER'S INDEX, AN INDICATOR OF WHAT IS GOING ON IN THE FISCAL MARKET, WHICH SHOWS THAT OVER THE LAST THREE TO FOUR WEEKS, THE AVERAGE YIELD HAS JUMPED FROM 7-3/4 TO 8.94. MR. BLAND INFORMED THE BOARD THAT UNTIL ABOUT THREE TO FOUR WEEKS AGO, THEY HAD FELT IT WOULD BE A GOOD IDEA TO GO TO NOTES AND THAT THEY WOULD HAVE NO DIFFICULTY IN CONVERTING INTO BONDS IN TWO OR THREE YEARS, BUT NOW HE WISHED TO GIVE THE COMMISSION AN ALTERNATIVE TO CONSIDER - BONDS VERSUS NOTES. HE CONTINUED THAT THEY HAVE BEEN WORKING WITH THE MBIA, THE INSURANCE COMPANY WHICH INSURES MUNICIPAL BONDS AND WHICH IS COMPRISED OF FOUR OF THE LARGEST INSURANCE COMPANIES IN THE UNITED STATES. HE ASKED THE BOARD TO STUDY A CHART SHOWING NOTES VERSUS BONDS AND EXPLAINED THAT IF THE BONDS WERE UNINSURED AND PLACED ON THE MARKET, THEIR RATING WOULD BE ABOUT BAA. HE NOTED THAT THE MARKET FEELS INDIAN RIVER COUNTY IS A GOOD SOUND COUNTY, BUT THAT IT HAS NO TRACK RECORD WITH CREDIT. INTERGOVERNMENTAL COORDINATOR THOMAS NOTED THAT THE COUNTY LANDFILL BONDS WHICH WERE SECURED WITH STATE REVENUE SHARING OBTAINED AN A RATING AND ASKED WHY THE CAPITAL IMPROVEMENT BONDS, WHICH WILL BE SECURED BY RACETRACK FUNDS, SHOULD RECEIVE A LOWER RATING. __ 2