New Jersey, You Should've Built That Tunnel
It should come as no surprise, then, that the state has lost the confidence of investors. While Colorado provided an 8.9 percent return since 2010, beating the national average of 4.95 percent, New Jersey's equivalent bonds gained 1.01 percent, the worst performance after Puerto Rico and Arkansas,
Source: http://www.bloombergview.com/articles/2015-06-12/new-jersey-you-should-ve-built-that-tunnel
As I understand the material in the link, New Jersey can borrow at a low rate (~1%) while Colorado has to pay ~8.9%. The Colorado rate is good for those renting their money to the state but it means that the Colorado taxpayers are carrying a heavier burden.
New Jersey certainly has economic problems and "interesting" politics, but the investors feel safe loaning New Jersey money since there is low risk of failure. The 8.9% rate on Colorado loans means that the investors are suspicious about project completion, project management, and/or eventual pay-back. Colorado just has more risk.
By way of explanation, would you rather be paying off a home mortgage with a 1% rate or one with a 8.9% rate? Get me in at 1% anyday.
High returns are only good for the "other guy". What is wrong with the lovely state of Colorado?
Mosby
(16,425 posts)Mike_SMO
(13 posts)Not really. The debtor pays for perceived risk. There is no credit for good looks or the Rocky Mountain High.
Still, what is the concern with Colorado? Something has got the money renters attention. The only significant thing that I have heard is a question about the use of the MJ tax proceeds.
Mosby
(16,425 posts)My previous comment was directed at the OP.
Why would he describe the bonds rating backwards, especially on bloomberg, a financial website?
The author has some sort of agenda.