CC PACKET 08091983 - Laserfiche WebLink

Home Browse Search

L' EHLERS AND ASSOCIATES, INC. FINANCIAL SPECIALISTS FIRST NATIONAL-SOO LINE CONCOURSE 507 MARQUETTE AVE. MINNEAPOLIS. MINNESOTA 55402 339-8291 (AREA CODE 612) • File: Financial Specialists:Ehlers and Associates,Inc. Please distribute to governing body members. September 1, 1983 Newsletter Interest rates, especially tax-exempt rates (while lower than their highs) are still very high, historically, and are rising. From July 1 to August 11 the Bond Buyer Index rose from 9.36% to 9.85% and the prospect is that, with a recovering economy, a rising private credit demand, and a $200 billion plus credit demand by the federal government, interest rates will increase. At a recent seminar an economist expressed his bullishness on America saying that, while the U.S. government credit demands in the last quarter of 1983 would be very _great, there would not be a large demand for personal and business credit. But, if there is a large demand, interest rates will rise. Not a one-armed economist, he was able to say: "On the other hand . There is a fear of massive defaults in, especially, loans to developing countries. The $8.5 billion IMF loan is a band-aid which permits additional loans so those borrowers will not default - just now - but it does not cure underlying problems. It actually is a bail out of banks who made the loans. The prospect of a $2.25 billion WPPSS default chills any financing underpinned by so-called take- or-pay, hell-or-high-water, contracts and any issue with "Washington" in it. Bond Attorneys will now keep in mind that most state supreme courts are elected and the fiasco brings into doubt the shiboleth'that large public power agencies necessarily command better management and advisors. There is some talk that the WPPSS default will prejudice all municipal bond issues but we -discount-that. • It did -not happeh 'after the New 'York crisis and we don't think it will happen again. However, if defaults do tarnish all tax-exempt bonds, then cities and the states had better be careful about IDB bonds which look very much like regular bonds with the city's name prominently displayed. And some IDB investors actually think they have city bonds. Company Notes: We are now converting our computer/word processing into an integrated Wang VS-80 system to further enhance the quality of Ehlers and Associates' work. We were first to move into computerized local government financial planning and have continually improved our equipment, skills, procedures and computer programs to lead the field. We are not cheaper, but we are more efficient and now have the capability to examine more options for each client and for each project and to do much more and better financial planning. Anyone can do standardized "popcorn" bond issues quickly and cheaply but, in the long run, cheap consulting can be very expensive. Fargo, North Dakota, for whom we recently financed a tax increment project as well as parking and a skyway system in connection with a large downtown hotel project, is now issuing $4,825,000 reserve water revenue bonds. We are very proud to serve that fine City. Meet Jeanne Frederick who joins Ehlers and Associates after several years with the City of Dubuque, Iowa. A native of Strawberry Point, Iowa, a graduate of Cornell College (Iowa) and an M.A. graduate of Harvard University, she will be working primarily with Dick Ehlers in Iowa. You may not have a first-name financial advisor to call so we are attaching a roster of folks at Ehlers and.Associates who can - help with your immediate needs. The meter will be off until we say otherwise and we are very good. Looking forward to hearing from you, we are Very truly yours, TE !7Z/ N.�•