Gross, SEC Fail to Break Auction-Rate Bond Paralysis
By Jeremy R. Cooke
March 14 (Bloomberg) -- Billionaires Bill Gross and Wilbur Ross and the U.S. Securities and Exchange Commission failed to restore confidence in the $330 billion auction-rate bond market, as borrowing costs for states and municipalities rose.
Auctions for borrowers from San Francisco to Houston were unsuccessful even after Gross, who runs the world's biggest bond fund, and Ross said they were buying municipal debt to take advantage of rising yields. Thirty-year tax-exempt yields rose 5 basis points to 4.88 percent this week. Last week, they fell 18 basis points from a three-year high of 5.01 percent, Municipal Market Advisors data show.
More than 67 percent of auctions in the market that includes cities, colleges, hospitals, student lenders and closed-end funds failed this week, based on data compiled by Bloomberg.
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