Bloomberg TV's Interview with Christine L. Todd, Director – Tax Sensitive Strategies
October 8, 2003

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In her recent interview on Bloomberg TV, Christine L. Todd, Standish Mellon's director of tax sensitive strategies, offers insight about California’s prospects in the wake of Arnold Schwarzenegger's election. Highlights include:

• California general obligation bonds have performed well since the summer’s historically wide yield spreads. There is still considerable opportunity in buying the state’s credit.
• Strong leadership in Sacramento would be beneficial to California’s bonds, assuming Schwarzenegger can build a consensus with the legislature and make inroads regarding the $8 billion budget deficit.
• Schwarzenegger will be challenged to maintain/grow revenue base while making structural budget cuts. Rescinding the Motor Vehicle License fee and/or challenge to the Deficit funding bonds would pose a problem.
• County and local level governments are likely to bear the biggest burden of fiscal belt-tightening.
• Fiscal pressure on municipal California issuers has not impacted spreads as much as is likely in the future. California’s deficit funding issuance in early 2004 will have to compete with a heavy forward calendar, which will push up the state’s borrowing costs. However, existing debt levels are moderate and issuance should be manageable.

For the full interview, please click on the link above.

Presented with the permission of Bloomberg TV.

The preceding information, and the views of the video interview to follow, are based upon the analysis of historical performance of various asset classes and assumptions with respect to future economic conditions. Past performance is not an indication of future results. This information is not intended to provide specific advice, recommendations or projected returns of any particular Standish Mellon product.