Philadelphia Facing Cash Shortfall Crisis
The city of Philadelphia today postponed for at least a week a planned $375-million short-term note offering designed to avert a looming municipal insolvency.
Mayor W. Wilson Goode told a news conference that the offering was shelved because of a lack of investor interest in the notes.
City officials said previously that Philadelphia, the nation’s fifth-largest city, will run out of money by January without the short-term borrowing.
Efforts to sell the notes were hampered Wednesday when Swiss Bank Corp. withdrew its plan to guarantee part of the offering, saying certain unspecified conditions had not been met by the city.
Philadelphia banks previously declined to guarantee the notes, saying they were too risky. Analysts said that without bank guarantees that the notes would be repaid, the city would have difficulty selling the notes unless it paid unusually high interest rates.
Goode said he asked the city’s finance director to determine precisely how long the city could continue to pay for daily operations.
The city projects a $206.4-million deficit for fiscal 1991 ending July 1.
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