Offers for state IOUs abound, but not sellers
Buyers have been lining up to take California’s IOUs off the hands of individuals, companies and other recipients.
But so far, the IOU holders aren’t very interested in selling -- perhaps because of expectations of a budget deal out of Sacramento soon.
SecondMarket.com, which created an electronic marketplace for the state’s IOUs on Wednesday, said it hadn’t yet recorded a single trade.
“We have significant buy-side interest, but sellers seem to be waiting to see what happens with the California legislature,” said Mark Murphy, a spokesman for New York-based SecondMarket.
Gov. Arnold Schwarzenegger and legislative leaders announced late Monday that they reached a budget deal that would let the state begin paying its bills again. Few details were released.
Whether state Controller John Chiang can stop issuing IOUs in place of normal checks will depend on whether any budget, once enacted, lets him quickly accumulate the cash to make required payments.
The budget’s terms will also dictate whether Chiang can redeem IOUs before their official Oct. 2 redemption date, a spokesman for his office said.
The IOUs will earn an annualized tax-free interest rate of 3.75% until the state pays them off. Dozens of offers for the IOUs have been posted on Craigslist, some offering as little as 80 cents on the dollar.