Financial Times: Debt crisis spreads to US municipalities

[El Pinko]

http://www.ft.com/cms/s/0/4e5d3dec-da8a-11dc-9bb9-0000779fd2ac.html?nclick_check=1

Debt crisis spreads to US municipalities
By Aline van Duyn and Michael Mackenzie in New York
Published: February 13 2008 23:39 | Last updated: February 14 2008 01:42

A collapse in confidence in a $330bn corner of the debt market has left US municipalities and student loan providers facing spiralling interest rate costs.

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The market’s sudden slump has pushed interest rates as high as 20 per cent for entities from the Port Authority of New York & New Jersey to a hospital.

“The auction securities market is falling apart,” said David Cooke, chief financial officer at Park Nicollet Heath Services in Minneapolis.

Municipal borrowers are scrambling to seek letters of credit from banks and other fresh sources of finance.